Making a profit during the upcoming copper boom cycle: Strategies and opportunities for investors

In the rapidly evolving landscape of global mining, copper is taking centre stage. The proliferation of data centres supporting artificial intelligence applications has created a demand shock for copper, a critical material essential for electrifying the economy. This surge in demand is poised to catapult the copper mining industry into a new era.

ERO Copper, a junior copper producer and developer with operations in Brazil and headquarters in Canada, is one company capitalising on this opportunity. Their Tucumã Project, an imminently producing copper project, is expected to double the company's total copper production by 2025. ERO Copper's assets include the Caraíba Operations, which contain multiple high-grade copper-producing mines.

Another company making waves is Lundin Mining Corporation, a Canadian copper producer with projects in multiple countries, including Argentina, Brazil, Chile, Portugal, Sweden, and the US. Lundin Mining Corporation hit a record high in copper production in 2023 and projects a further increase for 2024. The company, in partnership with BHP Group, recently acquired Filo del Sol for $3 billion, giving each company 50% ownership. Filo del Sol, located near an existing project owned by Lundin Mining Corporation, along the border of Chile and Argentina, boasts 4.5 billion pounds of indicated and inferred copper resources, in addition to additional gold and silver resources.

Freeport-McMoRan (NYSE: FCX) is another major player in the industry. Renowned for its geographical diversification, strong margins and cash flows, large and liquid stock, and advancing project pipeline, Freeport-McMoRan produced 1.3 million tonnes of copper in 2023, making it the largest pure-play copper producer in the world. The company also boasts 111 billion pounds of copper reserves.

The growing use of copper as a critical material for surging global energy demand has triggered the next copper supercycle. The energy needs of electricity grids, emerging economies, and the copper-intensive energy transition have given miners a major fillip. Brazil, where ERO Copper's operations are located, generated 91% of its electricity from clean energy in 2023, further emphasising the importance of copper in the transition to a sustainable future.

The copper spot price is nearing all-time highs, and the supply of copper has fallen below expanding demand, which may result in escalating copper deficits in years to come. This supply-demand imbalance has led to the copper mining sector being a standout in 2024.

The top copper mining companies featured in the Sprott Copper Miners ESG Screened UCITS ETF in 2024 include 27 globally active firms evaluated for environmental and social criteria. Notable holdings in the ETF include China Gold International Resources and Ivanhoe Mines, among others.

As the world grapples with the challenges of electrifying its economy and transitioning to cleaner energy sources, copper miners are poised to play a pivotal role in providing the critical material necessary for this transformation. The future of the copper mining industry looks bright, with companies like ERO Copper, Lundin Mining Corporation, and Freeport-McMoRan leading the charge.