When the global economy grows, profits of copper stocks can rise sharply as demand for their product increases.
This guide will describe what copper mining stocks are, the pros and cons of investing in the copper industry, and which are the UK’s top copper stocks to invest in.
What are copper stocks?
A copper stock is a mining company in the materials sector that generates either all or a large proportion of its earnings from getting physical copper out of the ground.
The world’s largest copper companies participate in all stages of the process. They’re responsible for:
- Exploration and drilling activities to find copper resources
- Developing copper mines if they deem a resource to be commercially viable
- Building the related infrastructure
- Producing the metal in massive quantities
Colossal amounts of copper are used every year. In fact, copper is the third-most consumed metal on the planet (behind iron ore and aluminium). This is because of its exceptional versatility and its consequent use in a wide range of applications.
Copper has extensive uses in a variety of industries including construction, transportation, utilities, machinery, and consumer electronics. As a result, it’s known as a bellwether metal — it can be used to measure the health of the global economy. This is why copper is often referred to as ‘Doctor Copper.’
Top copper stocks in the UK
Here are some of the largest copper producers on the London Stock Exchange today (by market capitalisation).
| Mining stock | HQ | Description |
| Glencore (LSE: GLEN) | Zaar, Switzerland | A diversified commodities producer and marketer with huge copper interests |
| Antofagasta (LSE: ANTO) | London, UK | A specialised copper producer operating in Chile |
| Central Asia Metals (LSE: CAML) | London, UK | A base metals producer that digs for copper in Kazakhstan |
Glencore
Glencore is a multinational commodities company that produces raw materials and markets commodities to consumers. It has considerable exposure to the copper market and in 2021 produced more copper than any other UK copper company.
Glencore has interests in copper assets that span the globe. It has mines, smelters, and refineries in Chile, Peru, Canada, Australia, the Democratic Republic of Congo, and The Philippines.
In total, the FTSE 100 business generated 37% of adjusted earnings from these copper projects in 2021, meaning it makes more money from copper than from any other single commodity.
Despite this, Glencore’s total copper output slipped 5% in 2021 to 1.2m tonnes. Selling its stake in the Mopani project in Zambia caused most of the decline.
However, this was still enough to put the copper stock in third place on the list of the world’s biggest red metal producers. Glencore also devoted around $1.92bn on capital expenditure at its copper business in 2021. This was $422m more than it spent a year earlier.
Glencore salvages scrap copper through its recycling division too. And it fulfils the role of ‘middleman’ between copper producers and consumers through its marketing unit.
Antofagasta
Antofagasta is the UK’s largest dedicated copper mining company and, like Glencore, trades on the FTSE 100. Due to lower grades and water supply issues, output here slipped 2% year-on-year in 2021 to 721,500 tonnes.
Antofagasta has sizeable stakes in four copper producing assets in Chile, the world’s largest copper-producing country. These include the sizeable Los Pelambres and Centinela projects which collectively account for 90% of group output.
Antofagasta is investing heavily to boost copper production and mine life at Los Pelambres and to increase output at Centinela. The copper stock is also undertaking exploration activity in Chile, Peru, Canada, and the United States.
Central Asia Metals
Central Asia Metals is a base metals miner that in 2021 generated three-quarters of EBITDA from its Kounrad copper asset in Kazakhstan. The remainder came from its Sasa mine in North Macedonia, where it produces lead, zinc, and silver.
Central Asia Metals has been pulling copper out of Kounrad for the last decade, an asset whose mine life stretches out to 2034. The Kazakh resource may hold 126,000 tonnes of recoverable copper.
Total production at Central Asia Metals rose 1% year-on-year in 2021 to 14,041 tonnes. Central Asia Metals has expanded the Kounrad mine twice, and is now focussing capital expenditure on the Sasa lead-zinc project.
Are copper mining companies sensitive to the economy?
Copper is an extremely economically sensitive metal, so prices can move up and down wildly according to broader industrial conditions. As a result, copper mining companies’ profits (and share prices) are also highly geared towards the broader macroeconomic landscape.
However, earnings of copper stocks aren’t just affected by the health of the global economy. Classic supply and demand conditions also influence commodity prices. So even if copper consumption is rising as economic conditions improve, the copper price might not shoot up. A glut of new supply or expectations of rising global production could keep prices subdued.
Conversely, we could see higher copper prices even during periods of no or low economic growth if, say, copper production in key mines or regions (such as in Chile following a fresh labour dispute) comes under pressure.
Is copper a good investment?
With the way the demand for copper is increasing based on the world’s lean towards going green, copper producers could be a great investment for UK investors. Based on current ecological policies, the International Energy Agency thinks annual copper consumption will rise from 24m tonnes in 2020 to 28.6m tonnes in 2030.
Copper stocks are popular investments for investors who are looking to make money from rising demand for electric vehicles (EVs). Due to the metal’s excellent electrical conductivity, it is an essential material in building the vehicles themselves as well as charging infrastructure.
Copper consumption is also tipped to rocket as investment in renewable energy increases and the rate of emerging market urbanisation grows.
Some analysts even believe that copper supply could fail to keep up with rapid demand increases. Researchers at Rystad Energy, for example, think a market deficit of 6m tonnes will emerge by the end of the decade.
However, copper stocks that manage to overcome these problems could stand to profit significantly over the next decade as copper shortages drive up prices.