Copper Rally Gains Steam as China Recovers, Supply Tightens

• Copper and iron ore prices rallied strongly in early 2025 heading into the release of key economic data from China.
• China's industrial output and steel production beat expectations in December 2024, but property investment continued to decline.
• Freeport-McMoRan requests approval from Indonesia to export copper concentrates in 2025 while repairing its fire-damaged smelter.
• Copper and iron ore prices broke through key technical resistance levels, signaling potential for further upside if the rallies can be sustained.
• Copper-focused mining companies such as Pan Global Resources, Marimaca Copper, Hot Chili, Koryx Copper, Atalaya Mining prepares 2025 exploration and development plans should position them well for growth and to attract investor interests.

Copper, a critical industrial metal, has recently caught the attention of investors as prices stage an impressive rally in early 2025. The red metal's fortunes are closely tied to the health of the global economy, particularly activity in top consumer China. As the world's second largest economy continues its rocky path to reopening after prolonged COVID-19 lockdowns, recent economic data and price action suggest the outlook may be brightening for copper demand and prices.

China Data Dump Supports Copper

Copper and iron ore prices were already on a tear heading into the latest batch of economic data from China, commonly referred to as the "data dump". While property sector figures remained weak, other data points bolstered the case for a demand recovery in top metals consumer China.

David Scutt, market analyst at Forex.com, highlighted the strong industrial production numbers in his analysis:

"Industrial output was the standout, growing 6.2% over the year versus forecasts for 5.4%. Within that, crude steel output surged 11.8% relative to December 2023, although total output fell 1.7% over the year."^[1]

Stabilizing home prices also provided promising signs for copper demand, with new home prices posting the smallest monthly decline in 18 months at just 0.08%. Existing home prices saw a slowing descent as well.

Technical Breakouts Bode Well

The recent rallies in copper and iron ore look underpinned by strong technicals as well as fundamentals. Scutt notes that COMEX copper futures surged as much as 11% since January 3 amid heavy trading volumes. The price sliced through both its 50-day and 200-day moving averages in the process.

"As long as the uptrend established in early January holds, the near-term bias remains bullish, supported by price and momentum signals," argued Scutt. He sees little visible resistance until $4.50 or even $4.66-$4.79 per pound if the rally continues.

Iron ore has also rebounded impressively, testing key resistance zones around $102.25 per tonne and the downtrend line from October 2024 highs. Clearing these levels could open the door to a retest of the 200-day moving average or beyond.

Largest Copper Producer Seeks Export Approval

In a sign of ongoing disruption to global copper supplies, top producer Freeport-McMoRan has requested approval from the Indonesian government to export copper concentrates in 2025. The company requires this allowance as it works to repair damage from a fire at its massive Manyar smelter in October 2024.

"Based on discussions with the Indonesian government to date, the company said in its results today, that it expects to recommence exports of copper concentrate during the first quarter of 2025 and, pursuant to current regulations, would be required to pay a 7.5% export duty on copper concentrate exports during 2025," - Mining Journal report.

The Manyar smelter, among the world's largest, is not expected to return to full capacity until early 2026 after extensive repairs taking up to 18 months. In the meantime, Freeport's exports of copper concentrates from its Grasberg mine, the world's second largest copper mine, will be essential to preventing further tightness in global copper supplies. Freeport projects consolidated copper sales of approximately 4 billion pounds in 2025, with gold sales of 1.6 million ounces. While supply disruptions pose challenges, the company appears well positioned to capitalize on any further strength in copper prices.

Copper Companies' 2025 Exploration & Development Plans

Pan Global Resources

Pan Global is accelerating its 2025 exploration programs at its copper-gold projects in Spain. The company plans extensive drilling at five new targets near its La Romana and Cañada Honda discoveries at the Escacena Project in Andalucia. Pan Global is also preparing for a maiden resource estimate at La Romana by mid-2025. Following a $7.2 million raise in November of last year, CEO Tim Moody stated:

“Part of the money will be going towards our La Romana deposit and continuing to expand and delineate the extent of that mineralization before we publish a resource, and we expect to put out a PEA either together with it or very soon after.”

Furthermore, the company will commence maiden drill programs at two targets at its Cármenes copper-nickel-cobalt-gold project in northern Spain. With a robust treasury, Pan Global is well-positioned to advance these prospective projects and potentially make new discoveries in the prolific Iberian Pyrite Belt.

Hot Chili Limited

Hot Chili's Costa Fuego is one of the world's largest undeveloped copper resources not controlled by a major. Its recently updated resource contains 3.6 Mt Cu-eq in the Indicated category. A 2024 PEA outlined strong economics with a post-tax NPV8% of USD$1.1B. Hot Chili plans to deliver a PFS in Q1 2025 and is targeting an increase to a potential 150 ktpa copper operation through resource growth and optimization. The project benefits from low elevation and proximity to key infrastructure in a leading mining jurisdiction. Hot Chili is also advancing funding optionality through its Huasco water infrastructure subsidiary.

Atalaya Mining

Atalaya Mining reported solid Q4 2024 operating results despite lower grades and recoveries, positioning for an active 2025 across its portfolio. The company expects to produce 48-52 kt of copper in 2025, with several near-term catalysts anticipated at Proyecto Riotinto and Proyecto Touro. The declaration of Proyecto Touro as a strategic industrial project is expected to streamline permitting. Atalaya also recently entered agreements to earn majority interests in two prospective copper-gold projects in the Skellefte Belt of Sweden with drilling underway. With the re-domiciliation to Spain complete, Atalaya looks forward to an exciting year of growth.

Marimaca Copper

Marimaca Copper has a large scale, low cost, open-pit development project in Chile with further exploration upside. Its updated 2023 mineral resource features 798 Mt at 0.45% CuEq in the Indicated category. A 2024 PEA demonstrated strong economics with an after-tax NPV8% of $1.1B. The company is targeting completion of a Pre-Feasibility Study in Q1 2025 and a Definitive Feasibility Study in H1 2026. Marimaca also announced prospectus on the ASX, as President & CEO Hayden Locke commented:

“As we move closer to a construction decision for the Marimaca Oxide Deposit and continue our aggressive exploration plans, a broader pool of capital will become increasingly important to our company. We believe a dual listing on the ASX complements and enhances the strong support we have received from our TSX shareholder base. Our development strategy continues to gain momentum. We have submitted our permit application for the MOD and expect to have more clarity on anticipated timelines towards the end of February 2025, following reception of the first pronouncement by the authorities over our submission. The Definitive Feasibility Study is progressing, and we expect it to be finalized in Q2 of 2025 with its release to the market thereafter."

Koryx Copper

Koryx Copper is advancing its large-scale Haib Copper Project in Namibia with an extensive C$20M 2025 drill and study program. This aims to expand and upgrade the resource, update the PEA, and deliver a PFS by year-end, positioning for a DFS and mine permitting by the end of 2026. Over 55,000m of drilling is planned, with a focus on near-surface higher-grade zones. Haib's low elevation and nearby infrastructure provide a lower hurdle for development. Koryx believes it is perfectly placed to unlock the potential of this significant copper resource through its experienced team and strong financial backing.

The Investment Thesis for Copper

• Copper is a critical metal for the green energy transition, electrification and development - long-term demand growth looks robust
• Supply growth constrained by lack of new major discoveries, declining ore grades, and operational/political challenges in key producing countries
• Prices breaking out to the upside as China's reopening gathers steam - more upside possible if China's property sector and industrial activity continue to recover
• Exposure via major miners like Freeport or copper-focused juniors - consider both value and growth opportunities
• Monitor global macro developments, China's economic recovery, supply disruptions, and inventory levels to manage risk

In summary, copper looks well placed to benefit from a demand recovery in China and ongoing supply challenges. Prices are breaking out to the upside amid promising economic data and could have further to run if technicals are confirmed. For investors, gaining exposure to copper at this juncture, either through major diversified miners or pure-play copper companies, is an attractive way to play the global green energy transition and development. However, geopolitical risks, global economic uncertainty and an uneven Chinese recovery remain key areas to monitor closely. Active management and disciplined risk control will be crucial to navigating the volatile but opportunity-rich road ahead for the red metal.

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References:

1. Scutt, David (January 2025). Copper, Iron Ore Forecast: No Major Pump from China Data Dump