Cash-Rich Copper Explorers Soar While Major Miners Play Safe

• Copper prices have strengthened moderately in early 2025, with gold continuing to outperform copper. Copper stocks at the LME rose in the second half of 2024 as financial trades unwound, coinciding with falling copper prices.
• Major copper producers BHP, Rio Tinto, Freeport, and Capstone reported mixed production results in 2024. Most are focused on brownfield expansions rather than major new greenfield projects due to capital intensity concerns.
• Copper exploration companies are seeing varied performance. Those with large scale potential, strong news flow momentum, and access to capital are favored by the market. Capital constrained juniors with deep, narrow, or small deposits are struggling to gain traction.
• Key copper exploration companies to watch include Element 29, Amarc Resources, Gladiator Metals, and Power Nickel based on strong drill results, growing resources, and share price momentum. Marimaca Copper is an emerging producer to watch.

As the world embraces a cleaner, more sustainable future, copper is emerging as a critical metal underpinning the global energy transition. From electric vehicles to renewable energy infrastructure, copper's unparalleled electrical conductivity makes it an essential component in electrification. For investors seeking to capitalize on this powerful macro trend, gaining exposure to copper producers and high-potential explorers could prove highly rewarding in the years ahead.

The Clean Energy Transition

The imperative to decarbonize the global economy is accelerating the shift towards renewable energy and electric vehicles (EVs). Governments worldwide are setting ambitious emissions reduction targets, enacting supportive policies, and investing heavily to drive the adoption of cleaner technologies. This clean energy transition is highly copper intensive.

According to the International Energy Agency (IEA), the global clean energy transition could drive a 40% increase in copper demand by 2040. Electric vehicles use up to 4x more copper than internal combustion engine vehicles, while renewable energy systems like wind and solar can be up to 5x more copper intensive than conventional power generation. As the world builds out its clean energy infrastructure, copper will be a key beneficiary.

The Copper Supply Challenge

Meeting this surging copper demand will be no easy feat. While copper prices have strengthened moderately in early 2025 to the $4.20-$4.30/lb range, supply growth is not keeping pace. Copper inventories rose in 2024 as financial trades unwound, and the major diversified miners are taking a cautious approach to new project development.

Many of the world's largest copper mines are seeing production declines due to falling grades and a lack of new discoveries. The average grade of copper ore mined has fallen by 30% since 2001, while the time from discovery to production for new mines has stretched to nearly 20 years. This supply challenge is being exacerbated by growing geopolitical risk in key copper producing regions like Chile and Peru.

The lack of new copper discoveries and the reluctance of major miners to invest in large-scale, capital-intensive greenfield projects is setting the stage for a supply deficit in the years ahead. Goldman Sachs forecasts the global copper market could face a 8.2Mt supply gap by 2030 without significant new mine supply.

Capitalizing on the Copper Opportunity

For investors, the compelling supply/demand dynamics of the copper market present a attractive opportunity. One way to gain exposure is through diversified mining majors like BHP, Rio Tinto, and Freeport McMoRan. These well-established producers offer investors a relatively lower-risk way to bet on rising copper prices. However, their diversified portfolios and exposure to other commodities can dilute the copper-specific upside potential.

Mid-tier copper producers and developers offer a more focused investment opportunity. Companies like Capstone Copper, First Quantum Minerals, Lundin Mining, OZ Minerals, and Hudbay Minerals are poised to benefit from rising copper prices while providing meaningful production growth potential.

For investors with a higher risk tolerance, copper exploration companies offer the potential for more exceptional returns. While many explorers fail to create value, select companies making significant new discoveries can generate outsized rewards.

Copper Bottomed, with Merlin Marr-Johnson

How to Evaluate Copper Equities

When assessing copper producers, investors should focus on companies with a proven track record of operational excellence, a competitive cost position, and a strong balance sheet. Jurisdictional risk is also a key consideration, with exposure to stable mining countries being preferable. Additionally, copper producers with organic production growth potential from mine expansions or new development projects warrant a premium valuation.

For copper explorers, investors should look for companies with experienced management teams that have a history of value creation and strong technical capabilities. Explorers with district-scale land packages in prospective geological regions offer the greatest potential for new discoveries. Healthy cash positions and access to capital are also critical, as exploration is a capital-intensive endeavor. Finally, investors should look for companies with a steady news flow of drilling results and other catalysts that can drive a market re-rating.

Copper Sector Players: Projects, Production & Performance

BHP Group

• Diversified mining giant
• Owns 57.5% of Escondida, world's largest copper mine
• Escondida copper production up 22% in 2024
• Formed Vicuña Corp. JV with Lundin Mining to develop Filo Sol and Jose Maria copper projects
• Focused on low capital intensity brownfield expansions rather than major greenfield projects

Rio Tinto

• Diversified mining major
• Copper production up in 2024 to nearly 700kt thanks to Oyu Tolgoi underground and Escondida
• Signed $195M deal with Sumitomo to develop Winu copper-gold project in Australia
• Winu targeting 10Mtpa operation producing 33ktpa copper and 80koz gold based on 600Mt resource grading 0.4% Cu and 0.3g/t Au

Teck Resources

• Major copper producer
• Copper production 446kt in 2024, guiding 490-500kt in 2025
• Quebrada Blanca expansion from 2bn to 8.8bn capex; will add 30-50kt, Highland Valley 30-40kt, and Antamina ~10% growth
• 2028 guidance shows 75kt drop

Capstone Copper

• Americas focused copper producer formed via 2022 merger
• Produced 184kt Cu in 2024, guiding 220-255kt in 2025
• Aims to grow to 280ktpa near-term and 400ktpa longer-term via Santo Domingo project
• Recent $6.5B market cap up sharply past 5 years but flat past 12 months
• Advancing Santo Domingo financing with strategic but no takers yet due to capex/margin concerns

Ivanhoe Electric

• Robert Friedland's exploration vehicle listed in 2022
• Trading at C$1.1B market cap
• Key projects are Typhoon geophysical target and Santa Cruz copper project in Arizona

ATEX Resources

• In Phase 5 drilling with 5 rigs operating
• $600M market cap, up from $200M
• Agnico Eagle as strategic investor
• Strong treasury with $55M cash

NGEx Minerals

• $2.5B market cap
• Share price up 75% in one year
• Strong recent intersections
• Market favorite

Power Nickel

• $39M market cap
• Share price up 6x in past year
• Spun out Chilean assets
• Copper-led economics with nickel and PGE credits
• Hit 20m at 4% copper

Element 29

• Peru-focused copper explorer
• Reported intercept of more than 1 kilometer with 0.39% copper, 360 ppm molybdenum and 3 ppm silver
• The company is in Phase 3 drilling with more results expected

Amarc Resources

• Canada-focused explorer
• Has three projects: Duke, Ike and Joy
• Market capitalization of $68 million
• Share price increased approximately 6x in past year

Marimaca Copper

• Developing Marimaca oxide copper project and Pampa Medina in Chile
• Expects to produce 50ktpa Cu at low costs near-term, expanding to 75ktpa longer-term
• Share price up 55% past year
• Backed by Assore Holdings and Mitsubishi

Fitzroy Minerals

• Chilean coastal plain explorer
• Completed 186m drill program at its Caballos project
• Current C$27M market cap, but pro forma, it will be closer to C$40M
• Two key projects targeted for 2025

Gladiator Metals

• Market cap: C$38M with a strong treasury (~$18M)
• Share price up 49% in 12 months
• Operating in Yukon at the Whitehorse Copper project. 19,000m drilling planned at Cowley Park prospect for 2025.
• Targeting 100M+ tons of high-grade copper

Key Copper Investment Themes

In navigating the copper equity universe, there are several high-potential investment themes that stand out:

• Oxide Copper Developments: With many major mines facing grade declines, low-cost, high-grade oxide copper deposits offer an attractive way to boost near-term production. 
• ESG Leaders: As investors increasingly focus on environmental, social, and governance (ESG) factors, copper miners with leading ESG practices are well positioned to attract capital and command premium valuations. 
• Copper-Gold Exploration: Copper deposits with significant gold by-product credits tend to have lower operating costs and higher margins than pure copper mines. 
• North American Development Projects: With growing concerns over geopolitical risk in Latin America, copper development projects in stable jurisdictions like the United States and Canada are attracting renewed investor interest.
• Emerging Copper Districts: As the search for new copper discoveries expands globally, emerging districts offer the potential for significant value creation. 

The outlook for copper demand growth is highly compelling as the world accelerates its transition to a cleaner, more electrified future. However, chronic underinvestment in new mine supply and declining grades at existing operations are setting the stage for a potential copper supply crunch. This supply/demand imbalance bodes well for copper prices and equities in the years ahead.

Investors can gain exposure to the copper theme through a range of equity opportunities, from diversified producers to pure-play explorers. By focusing on companies with strong management teams, attractive assets, and a commitment to ESG excellence, investors can position themselves to benefit from the coming copper boom while mitigating jurisdictional and operational risks.

Whether through established producers like Freeport McMoRan, emerging developers like Marimaca Copper, or high-potential explorers like SolGold, the copper investment thesis is compelling. As the global energy transition unfolds, copper is poised to power the world's path to a cleaner future, creating a generational opportunity for astute resource investors.