Freeport-McMoRan: Copper's Strong Fundamentals Drive Re-Rating

Freeport-McMoRan's shares look reasonable to buy due to strong copper fundamentals, supported by electrification of transport, growth of renewable energy, and large-scale infrastructure investments. The company benefits from a structurally strong copper history and growing demand for the metal.

Freeport-McMoRan's shares appear to be a reasonable buy, supported by strong copper fundamentals driven by the electrification of transport, growth of renewable energy, and large-scale infrastructure investments. The company benefits from a structurally strong copper history and growing demand for the metal.

Copper, with its exceptional electrical conductivity and durability, is the backbone of global electrification efforts. As the world shifts towards renewable energy, electric vehicles, and grid modernization, copper demand is surging. According to [1], copper demand in electric vehicles alone is projected to increase by 300% by 2025, requiring 83 kg of copper per vehicle compared to 23 kg in conventional vehicles.

Moreover, renewable energy systems, particularly wind turbines and solar PV installations, are also major copper consumers. Wind turbines require 4.7 tonnes of copper per 3 MW capacity, and solar PV installations need 3.1 tonnes per 1 MW capacity. These figures highlight the copper-intensive nature of modern energy systems.

The Netherlands serves as a striking example of the challenges posed by electrification. Over 11,900 businesses in the country are waiting for electricity connections due to grid capacity limitations. This situation underscores the massive scale of copper demand for basic infrastructure upgrades, with each substation requiring substantial copper content [1].

The demand for copper is not just cyclical but structural, driven by long-term shifts in how the world generates, transmits, and uses energy. Renewable energy expansion, electric vehicle adoption, grid modernization, and urbanization in developing economies are all permanent shifts that require sustained copper demand over decades rather than years [1].

Freeport-McMoRan's strong copper fundamentals are well-positioned to benefit from these trends. The company's extensive mining operations and history of copper production make it a key player in the copper market. As electrification continues to accelerate, the demand for copper is likely to remain robust, supporting Freeport-McMoRan's share price.

References:
[1] https://discoveryalert.com.au/news/copper-electrification-infrastructure-2025-demand-supply/