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Why Invest in Copper Mining Stocks in 2020 & Beyond

 

October 1, 2020 (Investorideas.com Newswire) The copper industry has seen a steady performance in 2020 that most analysts see retaining its momentum into 2021 and beyond.


The copper industry has seen a steady performance in 2020 that most analysts see retaining its momentum into 2021 and beyond.

Many companies are involved in the exploration, extraction, development, and production of copper, which remains one of the most widely, used metals today. It is used for a broad range of applications in electronics, construction, power generation, and transmission. Some of the big names in the sector include Australia-based Hot Chili Limited, China-based Zijin Mining Group Co. Ltd., Freeport-McMoRan Inc. (FCX), and Australia-based OZ Minerals Ltd. (OZL).

There are several factors driving the growth of the best copper mining stocks, which can be narrowed down to:

At the same time, improving trade relations, especially between the United States and China, and the global boom in electric vehicles and energy storage are also having a positive impact on copper prices.

As the world's largest importer of refined copper, the Chinese economy will leave a major imprint on the copper market as it gains renewed vitality. And let's not forget that China is also the world's largest producer of electric vehicles, which are "copper hogs."

Electric vehicles require about four times as much copper as a typical internal combustion vehicle. As the EV segment continues to gain market share, it will absorb a growing slice of the global copper supply.

The Bottom Line on Best Copper Stocks

Ranking the best copper stocks to buy for 2020 and beyond includes taking into account the companies' 12-month trailing price-to-earnings (P/E) ratio, output, quarterly and yearly performance, as well as their resilience to disruptions caused by the global pandemic of COVID-19. Some copper companies have also shared part of their profits with shareholders in the form of dividends, yielding good returns on investment.

Here's a closer look at the copper growth prospects of each of the mining companies whose stock is worth investing in.

Hot Chili Limited is an Australia-based company that acquires and develops copper projects within Chile. The company is principally engaged in mineral exploration, having recently come across one of the most significant copper-gold discoveries of the past decade in Chile. The company's projects include Productora, El Fuego and Cortadera copper projects. Hot Chili Limited is focused on achieving growth and development at its Costa Fuego copper projects, and in expanding the company's project portfolio to ensure a future copper production hub.

The company arranged an $8.9 million private placement to sophisticated and professional investors through the issue of shares at 1.5 cent per share and a 1 for 2 unlisted option exercisable at 2.5 cent and expiring 20th May 2022.

Turquoise Hill is an international mining company focused on the operation and further development of the Oyu Tolgoi copper-gold mine in southern Mongolia. This is the company's principal and only material mineral resource property. On November 12, 2019, Turquoise Hill Resources announced third-quarter 2019 production for Oyu Tolgoi. Copper production was 28,446 tonnes, and gold production was 25,607 ounces. Oyu Tolgoi is expected to produce 125,000 to 155,000 tonnes of copper and 230,000 to 240,000 ounces of gold in concentrates for F2019. Mill throughput for 2019 is expected to be approximately 45 million tonnes. Canaccord is about to sign a new mining deal with the Government of Mongolia in 2020, and a resolution on mine design and financing issues as a major catalyst that could result in a re-weighting of the Turquoise Hill's share price.

First Quantum Minerals is a Canada-based mining company engaged in the exploration, development, and production of mineral properties. Its primary focus is the exploration for copper, nickel, gold, and zinc ores. The company owns and operates seven mines, including the Ravensthorpe nickel mine in Australia; the Kansanshi copper-gold mine and copper smelter in Zambia; the Sentinel copper operation in North Western Province of Zambia; the Guelb Moghrein copper-gold mine in Mauritania; the Çayeli copper-zinc mine in Turkey; the Las Cruces copper mine in Spain; and the Pyhäsalmi copper-zinc mine in Finland. On January 9, 2019, the company announced Q4F2019 production of 204,000 tonnes of copper and 78,000 oz/Au. First Quantum also announced F2020 production guidance of 830,000 to 880,000 tonnes of copper and 280,000 to 300,000 oz/Au. Canaccord believes that the sale of a 20% stake (first speculated in September 2019) of its Zambia assets to a Chinese partner could pave the way for a takeover of the rest of the company in 2020.

Capstone Mining Corp is a Canada-based company involved in the mining and production of minerals including copper, zinc, gold, silver, and iron. Capstone has projects in Chile, Mexico, and Canada. The company reported net income of $4.3 million in Q2 2020 ended June 30, 2020 boosted by positive non-cash pricing adjustments of $13.6 million. Revenue for the quarter declined 7.6%. Capstone said that it was reinstating its original 2020 production and cost guidance since COVID-19 has not had a significant impact on its operations to date.

Copper demand is currently on track to increase exponentially in the coming years, making it a compelling sector for growth-focused investors. These four companies are some of the most attractive options for copper company stock worth considering in 2020.

While all copper-producing companies should benefit from the sector's growth, some are best positioned to capture the upside.

Of course, prior to purchasing these copper stocks, investors should evaluate their visible growth prospects and potential risks.

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