July was a wild month for copper enthusiasts
Take this Opportunity to Buy More Copper!
July was a wild month for copper enthusiasts. One for the record books.
I feel sorry for those purchasing agents and finance types who had to deal with sourcing domestic copper for their companies. For those of you who weren’t posted up with a bucket of popcorn (like yours truly), here’s what went on…
On July 8th, the Trump administration announced a 50% tariff on all imported copper. They said this would go into effect on August 1st. That kicked off a wave of panic for everyone who uses copper. And the increased demand got traders involved as well.
The U.S. imported a year’s worth of copper in the first half of 2025. U.S. copper supply hit a seven year high. As you can imagine, this compressed demand sent the copper price to new all-time highs. U.S. buyers paid up to a 25% premium over prices listed on the London Metal Exchange.
Then, on July 31, the administration announced its actual tariff plan. It placed a 50% tax on semi-finished products like pipes, rods, and wires. But no tax on raw materials.
That sent the copper price plummeting:
This is a crazy chart. Copper gave back all the gains it made since February. It highlights the participation of traders in the price runup. But it also offers us an opportunity. Copper stocks will be hit by this wave. And we want to own copper miners.
That’s because the math hasn’t changed.
There simply isn’t enough copper to meet demand. And we know that rising demand will drive prices higher. We have precedents from the last few months to prove that.
Revisiting the Copper Market
Copper demand continues to explode thanks to the ongoing electrification of transportation, demand for grid-scale batteries, and buildout of massive AI data centers.
According to Reuters, grid investments topped $400 billion in 2025. That eclipsed the $390 billion spent in 2024 (which was a record high according to the International Energy Agency (EIA).
Analysts at Benchmark Mineral Intelligence forecast copper demand from upgraded grids around the world to hit 14.87 million metric tons by 2030. That’s an additional 2.35 million tons per year.
AI data centers alone will consume 260,000 metric tons in 2025 and climb to 650,000 metric tons by 2030.
To put that in perspective, the world’s largest copper mine, Escondida, only produces about 1.28 million metric tons of copper per year. And that mine is a geologic aberration.
The average production of the top ten largest copper mines in the world is just 550,000 metric tons per year.
To meet that additional 2.35 million metric tons per year of growth, we’d need to find, develop, build, and start four mines that would rank in the top 10 copper producers.
That’s just not in the cards.
The biggest projects in the works are mines like Copper World in Arizona. That mine will produce 92,000 metric tons of copper per year. Udokan, in Russia, is another new project. It will ramp up production to 450,000 metric tons per year by 2028.
Even Kamoa-Kakula, the crown jewel of new copper projects in the Democratic Republic of Congo, will only produce about 560,000 metric tons per year.
You see the trend.
There just aren’t enough new copper mines to meet grid demand for new copper.
We’ve said it many times – copper is the new oil. It’s the backbone of future energy supplies.
We agree with the sentiment of the world’s largest copper buyer (Italian cable producer Prysmian): copper demand moved from cyclical to structural.
That means we shouldn’t have these crazy peaks and valleys in the price. It also tells me that when we get a valley, it’s a buying opportunity.
Copper Miner Opportunities
We need to take this opportunity to add more copper to our portfolio. As we discussed, the fundamentals are a tail wind to this investment. But there’s more to it than that.
We don’t believe copper miners are priced correctly today.
We’ve discussed this in the past, but we’ll do a quick refresher. Miners earn money by producing metal (copper) for less money than they can sell it for. The problem with miners is that they can’t control the price of the metal.
That can be devastating when the metal price falls. And it creates huge windfalls when the price rises.
Imagine your company produced copper for $2.80 per pound and sold it for $3.00 per pound. You earned $0.20 per pound or 7%. That’s not a great profit margin. But if the copper price goes to $4.00 per pound, you do better. Now you earn $1.20 per pound or 40%!
That’s a huge improvement and should mean you get a big rerating on your stock price…at least in theory.
But let’s look at a real-life example. Giant copper miner Teck Resources (NYSE: TECK) produced 446,000 metric tons of copper in 2024. They plan to increase that to between 490,000 and 565,000 metric tons in 2025.
The production cost was less than $2.50 per pound. That should equate to a much higher company valuation.
That’s not the case at all:
As we can see, Teck’s share price is down for the year. And it’s not alone. Many of the major copper producers are not getting any value from production growth or margin expansion.
Teck’s shares are down 25% over the past two years while the copper price is up nearly 13%:
If we look at the broader basket of copper stocks, we see copper stocks underperformed the metal price all of 2025.
That means investors and speculators hate mining companies. They gave the companies zero credit for the rising copper prices. It is a fantastic situation that should produce some excellent returns for us.
How to Play the Current Copper Opportunity
There are several ways to play the current sell off in copper.
Here are three options for playing the current opportunity in copper…
You can simply buy shares of the Global X Copper Miners ETF (NYSE: COPX) and do fine.
If you are strongly risk averse, this would be the right choice.
But we see two major mining companies that appear to offer us larger upside potential than the copper miner index.
Here’s what we mean…
Teck Resources (NYSE: TECK) – Big and Safe
We already mentioned this company’s potential. Teck Resources is a Canadian mining company focused on base metals like copper, zinc, and lead. It recently divested itself of its last coal mines. Today it’s a smaller company, with a $15 billion market cap and pays a 1.16% dividend.
It trades at less than ten times earnings right now. Its recent quarter (March to June) beat analysts’ expectations by 35%.
The company forecasts a 14% growth in copper production in 2025. And we believe (as we discussed above) that its earnings will go up in the second half of 2025.
This is an easy buy on weakness right now.
Action to Take: Buy Teck Resources (NYSE: TECK) at the market price and use a 25% trailing stop. That means if we buy shares for $31.61 per share, we will sell if they close below $23.70 per share.
Ivanhoe Mines (TSX: IVN) – World Class Copper Mine with an Asterisk
Ivanhoe Mines is a $14.4 billion mining company that is part owner of the world-class Kamoa-Kakula copper mine in the DRC.
Unfortunately, in May 2025, the mine had a seismic event that caused some structural issues. Namely, a bunch of pillars collapsed, and the mine partially flooded.
The damage forced the company to revise its 2025 production guidance from 520,000-580,000 metric tons of copper to 370,000-420,000 metric tons of copper.
As you can imagine, that clobbered the stock price:
We believe this is a massive overreaction.
Kamoa-Kakula is forecast to return to full production next year. Raymond James mining analyst Farooq Hamed wrote:
“We have made an assumption that de-watering and remediation efforts will continue through the third quarter this year with the Kakula underground beginning to ramp up in the fourth quarter with normalized run rates in early 2026. As a result, we are decreasing our target price to $21 per share from $23 based on the short-term impact on 2025 cash flows. The update has minimal impact to our long-term net asset value estimate on the assumption that remediation efforts will allow the mine to return normal operations in early 2026.”
To summarize, we can buy this stock for less than $11 per share when the Raymond James analyst revised his share value to $21 per share.
Kamoa-Kakula is one of the best new copper mines in the world. Arguably THE BEST, geologically. It’s hard to pass up this opportunity to own that kind of premier asset at a discount like we see today.
Some investors will avoid this stock because of the disruption. But we see this as a second tailwind. Kamoa-Kakula is the engine that drives Ivanhoe. It must produce copper. And now that the world is watching, expect Ivanhoe’s engineers to root out every bug and bunny.
I wouldn’t be surprised if they hit the top of their guidelines next year, to reassure investors.
Action to Take: Buy Ivanhoe Mines (TSX: IVN) at the market price and use a 25% trailing stop. That means if we buy shares for $10.65, we will sell if the stock falls below $7.99 per share.
Conclusion:
The current administration isn’t making it easy for economists and businesses to navigate right now. This artificial distortion of the copper market is one of the few easy moments in the market. This is an opportunity that we simply can’t miss.
As we wrote in the May 2025 issue regarding Solaris Resources (NYSE: SLRS),
Take opportunities to buy when copper prices are weak.
This is that kind of opportunity. Make sure you add more copper to your portfolio now. This is a short window of opportunity.
For the Good,
The Mangrove Investor Team
