Copper Bottomed: Cash-Rich Copper Explorers Soar While Major Miners Play Safe

19th Feb 2025

Copper Market Summary – Price Trends & Consensus (Early 2025)

Copper Price Trends

• Moderate price strengthening: Copper prices have risen from $4.00/lb in late 2024 to $4.20-$4.30/lb in early 2025, despite higher LME inventories.
• Historical price movements:
  • Early 2024 saw declining LME stocks, driving copper prices higher until May 2024.
  • Mid-to-late 2024 experienced a price decline as copper stocks replenished in warehouses.
• Gold outperforming copper:
  • Gold has been stronger relative to copper, driven by macroeconomic uncertainty and monetary policies.
  • Long-term copper price charts (adjusted using gold as a real money proxy) suggest copper remains undervalued relative to historical cycles.

General Market Sentiment

• Shift in investor sentiment post-January 2025:
  • Copper and gold have returned to favour in capital markets, especially after the U.S. political shift on January 20 (inauguration day).
  • Increased financing activity in the sector suggests a more bullish investment climate.
• Copper exploration & development landscape:
  • Companies with large-scale potential, strong news flow, and capital access continue to outperform.
  • Juniors with limited funding or challenging deposits struggle to maintain momentum.
• Supply challenges persist:
  • Major miners (BHP, Rio Tinto, Freeport, Capstone) are prioritizing brownfield expansions over greenfield projects due to capital intensity concerns.
  • Example: Rio Tinto’s Winu project targets only 33ktpa copper, a relatively small output for its 600Mt resource.

Key Investment Themes & Outlook

• Exploration success and capital access are critical for market support.
• Lower-capex projects (e.g., oxide copper deposits) gaining interest due to easier financing.
• Stable jurisdictions preferred as geopolitical risks affect traditional copper-producing regions.
• Demand growth from clean energy transition remains a key long-term driver.
• Investors favour companies demonstrating scale potential, strong balance sheets, and consistent news flow.

Consensus View

• Cautious optimism: Copper is gaining market attention, but growth remains measured, driven by selective investments in scalable, low-capex projects.
• Financing conditions improving: Market sentiment is stronger than late 2024, leading to increased capital raising activity for high-potential companies.
• Supply-side hesitancy: Major producers remain risk-averse, limiting large-scale greenfield investments, which could constrain future supply growth.

• Overall market outlook is positive, but investors need to carefully select opportunities based on project economics, financing ability, and jurisdiction risk.

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