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What Market Correction? Copper Is Touching an All-Time High -- Here's How to Profit From It.
FCXFreeport-McMoRan(FCX) The Motley Fool·2025-03-24 16:14

Core Viewpoint - The price of copper is nearing an all-time high, presenting a strong investment opportunity in Freeport-McMoRan, a major copper and gold miner, particularly due to its U.S. production and potential benefits from market dynamics [1]. Group 1: Copper Price Dynamics - The Chicago Mercantile Exchange (CME) copper price is up 27% year to date, currently around 5.10perpound,whiletheLondonMetalExchange(LME)priceisupalmost145.10 per pound, while the London Metal Exchange (LME) price is up almost 14% year to date [2]. - Concerns over potential tariffs on imported copper by the Trump administration have led to increased buying in the U.S. market [3][4]. Group 2: Freeport-McMoRan's Competitive Position - Freeport-McMoRan produces copper primarily in the U.S., which shields it from retaliatory tariffs and allows it to benefit from rising CME prices [5]. - The company’s production volumes for 2024 are projected at 1.246 billion pounds in North America, 1.168 billion pounds in South America, and 1.8 billion pounds in Indonesia [6]. - The unit net cash cost of production is 3.04 per pound in the U.S., compared to 2.36perpoundinSouthAmericaandanetcashcreditof2.36 per pound in South America and a net cash credit of 0.08 per pound in Indonesia, indicating higher leverage to U.S. price increases [6][7]. Group 3: Production Expansion Potential - Freeport-McMoRan has plans to increase U.S. copper production, with a low-cost leaching initiative expected to produce 300 million to 400 million pounds by 2026, up from 214 million pounds in 2024, aiming for 800 million pounds by 2030 [10]. - The company is exploring brownfield expansions in Lone Star, Arizona, which could double current production, and is considering a project in Bagdad, Arizona, that could add 200 million to 250 million pounds by 2029 [11]. Group 4: Financial Outlook - With copper prices at 5perpound,Freeport−McMoRanisprojectedtogenerate5 per pound, Freeport-McMoRan is projected to generate 15 billion in EBITDA in 2026 and 2027, suggesting the company is undervalued with a current market cap of $58.1 billion [12].