Copper miners glimpse the future they’ve long seen coming

El Soldado copper mine in Chile. (Image courtesy of Anglo American | Flickr.)

For much of the past decade, there’s been a widely accepted orthodoxy in the mining industry that copper is the place to be.

Its champions have pointed to a likely explosion in demand as the global economy electrifies and decarbonizes, while fresh supply has looked increasingly scarce.

Instead, the metal has largely been overshadowed by old-industry stalwarts such as iron ore and coal, which have driven record profits for mining’s biggest names in recent years.

Yet a supply shock and growing confidence in an economic recovery are now seeing copper take center stage.

Production concerns have been fueled by Panama’s order late last year to shut a giant First Quantum Minerals Ltd. mine, removing roughly 400,000 tons of the metal from the world’s annual supply.

Behemoth Anglo American Plc then stunned investors by saying it was scaling back output by about 200,000 tons.

The market initially shrugged off these cuts as consumption looked anemic. But that’s changing as manufacturing — perhaps the most important demand metric for copper — shows signs of picking up almost everywhere.

In China, the official manufacturing purchasing managers’ index expanded in March for the first time since September, while preliminary data from India points to some of the strongest growth for the industry in years.

That’s catapulted the commodity to the highest prices in more than a year, up almost 9% so far in 2024.

While metal markets often move in tandem — with Chinese demand lifting all the boats — at the moment that’s not the case. Iron ore remains under pressure, while coal continues to slide.

That’s allowed the pure-play copper producers to lure investors who have cooled on the large, diversified miners — whose profits are dominated by iron ore.

Copper specialist Antofagasta Plc has gained almost 30% this year, while Freeport-McMoRan Inc. is up about 15%. By contrast, mining’s biggest names — BHP Group Ltd. and Rio Tinto Group — are both down around 14%.

(By Thomas Biesheuvel)

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