Global demand for renewable energy is sparking a bull market for copper — a crucial component for green energy, including solar, wind, hydropower and electric vehicles. Arizona is the fourth-biggest producer of copper in the world.
The clear message here: copper is here to stay. The secondary message, according to Tyler Scott, Versant Capital Management research analyst and Tom Connelly, Versant Capital Management president, founder and chief investment officer, is that now is the prime opportunity to invest in copper.
“At Versant Capital Management, our preferred vehicle for investing in the copper space is to buy a portfolio of equities that have exposure to different commodities across agriculture, energy and minerals,” Scott says. “This diversification offers protection against single security risk and ensures that the companies held in each commodity are the largest producers and investors in the space.”
Phoenix-based Freeport McMoran, for example, is the second-largest Phoenix-based company by sales and the largest by net income at $16.4 billion and $1.82 billion, respectively, Connelly says.
“Freeport McMoran’s sales are driven by copper, and have interests in and operate some of the most significant copper deposits around the world, including the Copper Mountain of Morenci in Arizona,” Connelly says.
Scott and Connelly also illuminate the fact that some of the largest copper producers around the world don’t appear to be selling their top assets, which is usually an indication that the management teams feel strongly about their potential to generate future profits for their firm from these assets.
“The near- and longer-term disruptions of developed countries reinvesting in their electrical systems and electrical vehicles sales penetration are potential drivers of future demand,” Scott says, “but we believe the outlook is strong even without those aggressive scenarios.”
“We will keep a close eye on copper to make sure it does not get ahead of itself, with a concern that investors using copper as a trade for electrical vehicle penetration, solely, may distort market values in the near term,” Connelly adds.
