Freeport-McMoRan (FCX) is proving to be the best company to profit from the new copper bull market, suggests Mark Skousen, economist, global strategist and editor of Forecasts & Strategies.
If copper prices stay around $4 per pound, Freeport’s operating cash flow in 2025/2026 is expected to reach $7.5 billion, but at $5 per pound, the cash flow could hit $11 billion.
Copper prices have been moving up. Even though the global economy has slowed, copper prices are benefiting from strong underlying demand due to the electrification of everything, the clean energy movement and investment in data centers to power artificial-intelligence (AI) applications.
On the supply side, it is going to be more expensive and time consuming to find new copper mines because of government regulations and mining permits.
That’s where the Freeport advantage comes in. It has developed advanced leaching technologies to recover previously unrecoverable copper from its waste stockpiles. Motley Fool calls it Freeport’s “Secret Weapon.”
Business is booming, recovering 51 million pounds in the first quarter of 2024. The company plans to recover 300 to 400 million pounds in the next few years, and ultimately 800 million pounds, equivalent to $3.7 billion in value.
New CEO Kathleen Quirk stated, “That's the equivalent of a large-scale copper mine with low capital intensity, low cost and a low carbon footprint.” It’s also equivalent to around 19% of Freeport-McMoRan’s planned sales of 4.15 billion pounds in 2024.
In addition to the leaching initiative, the company plans to expand its existing mines in Arizona and Chile, adding 400 million pounds of copper per year within two to three years without “significant investment or long lead times” and 1.7 billion pounds in seven to eight years. Freeport is a long-term buy.
