Compare both pure-play copper miners and diversified mining companies to match your risk appetite and exposure goals.
If you want copper exposure without picking individual stocks, explore global copper ETFs or CFD platforms.
Watch copper price movements and global demand drivers like EV adoption to time your investment effectively and manage short-term volatility.
Copper is among the world's most highly consumed metals. It has an abundance of uses – from our homes to industrial machinery and even plays a critical role in reaching net-zero.
If you're looking to invest in copper stocks, you can choose between pure-play copper stocks on the Australian Securities Exchange (ASX), such as Sandfire (SFR) and OZ Minerals (OZL), or you can buy miners that produce many different metals including copper, such as BHP Group (BHP).
You also have the option of investing in copper ETFs (exchange-traded funds) or trading copper futures or options.
This guide will cover how you can invest in copper stocks in Australia, along with the pros and cons, as well as the best performing copper stocks on the ASX.
Copper market roundup
Copper rose 0.04% last month as the proxy barely broke a sweat in July. The metal is largely seen as a reliable barometer for global economic health and these quiet movements show a steady holding pattern in broader industrial demand. When you look at the short term you see a similarly flat story as the market fell 0.04% over the past three months. Despite this recent pause it still climbed 2.21% for the year so far.
The asset has certainly seen a wilder ride over the longer term. Over the past year the proxy reached a 52-week high of $28.13 and dropped to a 52-week low of $13.22. Keeping an eye on these foundational materials gives us a handy read on the wider economy and it is always fascinating to see how the numbers unfold.
Types of copper stocks
There are 2 main types of copper stocks on the ASX:
Pure-play copper companies: These are businesses that focus exclusively on copper production.
Large mining companies: These are miners that produce copper and a bunch of other minerals as part of a wider mining activities.
While both types of stocks will give you exposure to copper, they do come with their own specific strengths and weaknesses.
A pure copper miner has a greater exposure to copper, which could be a positive when the price of copper is rising but a downside when prices are falling.
By comparison, larger mining companies may be diversified across a number of commodities, which could be a better hedge when copper prices are struggling, but might not offer the same upside when prices are high.
If you're looking at buying copper stocks, here are a few things to watch out for:
Best ASX copper stocks
There are more than a dozen copper stocks on the ASX. We've listed the top 5 based on their performance so far in 2024 (and over the last 5 years). This list was updated on 14 June 2024 using TradingView data.
1. Australian Gold and Copper Limited (ASX: AGC) Year-to-date performance: 480.88% 5-year performance: 97.50%
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You can invest in the asset through its future prices without actually taking ownership of it.
In Australia, contracts for difference (CFDs) are most commonly used when it comes to trading commodities.
CFDs are derivative investment products that allow you to trade on the future prices of underlying assets such as commodities, stocks and indices.
By investing in copper CFDs, you're speculating on the price of the asset in the future. In other words, you're agreeing to pay today's prices for an asset that gets delivered sometime in the future.
If the price rises between now and the time when the CFD finishes, you'll either make or lose money depending on how the trade played out. For example if you think the price of copper will fall and trade against it, but instead the price rises, you'll lose your investment.
On the flip side, you can also place orders against copper. If you think the price will drop, you can "short" the contract. This means they put in an order to sell the asset at today's prices for delivery in the future. Now, if prices drop between the time the short contract was purchased and the contract expiry date, the trader would potentially make money. If prices rise, they could lose money.
However, CFDs are a much riskier way to gain exposure to the sector. It is not advised that beginners use CFDs.
Futures and other options work in a similar way. When it comes to future copper contracts, you're agreeing to buy an asset at a future set price. In other words, you're agreeing to pay today's prices for an asset that gets delivered sometime in the future. You can once again go long (expect the price to rise) or short (expect the price to fall) in the futures markets.
Pros
If you can read the market, you can gain solid yields from your investment
You can invest in a market that is falling
CFDs/futures contacts can be used to day trade
Cons
These assets are highly risky – add leverage and you can lose a lot of money quickly
You don't own underlying assets – you own futures contracts and are speculating on the price of copper
Compare CFD brokers to trade copper futures
Disclaimer: General information only. All forms of investments (and in particular, trading CFDs, commodities and forex) carry significant risk, including the risk of losing more than the invested amounts, market volatility and liquidity risks. Past performance is no guarantee of future results. Such activities are not suitable for most investors.
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Why invest in copper stocks?
Copper has an expansive range of industrial and consumer applications – from factories and transmission lines to homes and electronics. And the recent push for electric vehicles (EVs) is likely to increase the demand for this essential metal.
Electric vehicles have 5 times more copper than traditional cars.
And this new driving technology will also require large amounts of copper to support its electric charging infrastructure. Copper’s strong ties to many sectors of the economy likely mean that the demand isn’t going anywhere.
Not only is demand expected to grow due to EVs, it also plays an important role in solar and wind energy systems. So regardless of what green energy initiative is implemented, it is likely that copper stocks will benefit.
What is copper used for?
Copper is a reddish-orange metal that is corrosion-resistant and an excellent conductor of heat and electricity. In its natural state, copper is soft, solid and can be moulded into different shapes and thicknesses.
It is naturally found in ore deposits that are mined or leached. Mining crushes and grinds the ore into powder, where the unwanted materials and other impurities are removed. Leaching uses sulphuric acid to remove the copper from the other ore minerals.
Copper has a plethora of uses across 5 main markets:
Construction. Wiring, heating, refrigeration and plumbing all use copper materials.
Electrical and electronics. Utilities and electronics need copper wiring and parts.
Consumer products. Cookware and household appliances use their fair share of this raw material.
Transportation. Vehicles, including aeroplanes, cars and trucks, are manufactured with copper.
Industrial equipment. Machinery consumes millions of pounds of copper every year.
Copper stocks generally refer to companies that explore, develop, produce and sell copper all over the world.
Risks of investing in copper stocks
While copper is one of the most abundant metals on Earth, only a small portion is economically viable to extract at today’s prices using current technologies. So mining companies are vulnerable to copper price fluctuations, which are easily impacted by geopolitics.
For example, global copper prices fell to their 2-year low in 2019. It was collateral damage amid the escalating trade war between the US and China – a country that consumes over 50% of the world’s metal. So even though in 2023 there are a number of tailwinds for the sector, it can easily change.
An additional risk is that there are other practical substitutes for copper.
In some instances, manufacturers can use aluminium instead of copper. These include automobile radiators and optical fibre in telecommunications equipment. Plastics can also be used for pipes and plumbing fixtures instead of copper. As such, it could see a lower demand for copper, meaning the price of the commodity could fall.
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Bottom line
Copper is involved in a lot of economic sectors. While copper's consumer and industrial applications keep it in demand, you’ll need to keep an eye on global trade wars.
Copper can be a solid long-term investment as it’s essential for renewable energy, electric vehicles and infrastructure development. Its price tends to move with global economic growth, so investors should expect some volatility and consider their risk tolerance before investing.
You can buy copper stocks through an online share trading platform that offers access to the ASX or international markets. Once your account is verified and funded, search for a copper mining or exploration company and place your trade.
Copper prices are largely driven by supply and demand, global economic activity, construction growth and technological demand such as renewable energy and electric vehicles. Disruptions at mining sites, currency movements and geopolitical issues also play a role.
The main risks include fluctuating commodity prices, operational challenges at mining sites, regulatory changes and shifts in demand from major economies. Copper stocks can also be affected by broader market downturns.
There are limited options for copper-focused ETFs directly on the ASX, but investors can access global ETFs that track copper prices or copper mining companies via platforms that offer international trading.
Investors can gain exposure through copper ETFs, copper futures, or diversified mining companies that have copper as part of their portfolio. Another option is investing in renewable or industrial sectors that indirectly benefit from copper demand.
Because copper is widely used in manufacturing and construction, stronger global growth usually boosts prices and lifts copper mining stocks. Conversely, during economic slowdowns or recessions, demand and prices tend to drop.
Copper is essential for renewable energy systems, electric vehicles and power grids due to its superior conductivity. As countries push towards net-zero targets, copper demand is expected to climb, which can influence miner revenues and stock performance.
Yes. You can gain direct exposure by purchasing copper futures or commodity-backed exchange-traded products. However, these options often come with higher complexity and risks compared to owning mining shares.
Key producers include Chile, Peru, China, the Democratic Republic of Congo and Australia. Production levels and export policies in these countries can influence global supply and copper prices.
Important information: Powered by Finder.com.au. This information is general in nature and is no substitute for professional advice. It does not take into account your personal situation. This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for most investors. You do not own or have any interest in the underlying asset. Capital is at risk, including the risk of losing more than the amount originally put in, market volatility and liquidity risks. Past performance is no guarantee of future results. Tax on profits may apply. Consider the Product Disclosure Statement and Target Market Determination for the product on the provider's website. Consider your own circumstances, including whether you can afford to take the high risk of losing your money and possess the relevant experience and knowledge. We recommend that you obtain independent advice from a suitably licensed financial advisor before making any trades.
Kylie Purcell is an experienced investments analyst and finance journalist with over a decade of expertise in a wide range of financial products, including online trading platforms, robo-advisors, stocks, ETFs and cryptocurrencies. She is a sought-after commentator and regularly shares her insights on the AFR, Yahoo Finance, The Motley Fool, SBS and News.com.au. Kylie hosts the Investment Finder video series and actively contributes to the investment community as a judge and panellist. She holds a Master of Arts in International Journalism, a Graduate Diploma in Economics, and ASIC-recognised certifications in securities and managed investments.
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Cameron Micallef is a personal finance journalist with eight years of experience, specialising in investing, property and household bills. He has written for Smart Property Investment, nestegg and Investor Daily. Cameron holds a Bachelor’s degree in Communication and Media Studies and Commerce, as well as a Tier 1 Generic Knowledge certification (RG146), ensuring compliance with ASIC standards.
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