This Mining Stock Is Quietly One of the Best Trades in Energy
Investors may be underestimating copper's importance to the energy transition and the demand for power coming from AI investment.
Overview
Freeport-McMoRan (NYSE: FCX) is not a pure-play energy company, but it is definitely a play on the energy transition and the associated electrification megatrend, including the massive wave of investment in artificial intelligence (AI) infrastructure. All of these technologies imply ongoing growth in demand for copper, and that's where Freeport-McMoRan comes in.
The company is the largest producer of copper in the U.S. and "supplies approximately 70% of the refined copper produced domestically," according to management. That makes it the key domestic supplier of a metal that's crucial to electricity applications. As such, Freeport-McMoRan would be a major beneficiary of a move by the Trump administration to extend tariffs on copper to refined copper products.
Details
The key driver of copper demand is electrical applications, with more than 65% of the world's copper used for electricity purposes. That demand is set to increase due to the relatively higher copper content in EVs compared to internal combustion engine vehicles (EVs have more than double the amount of copper due to extensive wiring). Solar panels are also copper-intensive, and copper is also needed to connect renewable energy to the grid.
Source
Originally published at www.fool.com.