When talking about mining stocks, most investors look at gold and silver first. Little do some know, they are missing out on other popular niches. Copper stocks have become a hot commodity when it comes to metal trading in 2021. Copper companies will explore for, extract, and produce the metal. Currently it is the third-most-used metal in the entire world.
Often copper stocks follow the performance of the Global X Copper Miners ETF, which has provided returns of more than 50% in the last year. If you plan on investing in copper stocks there are a few things to consider first. When deciding which copper company to invest in, looking at its volume and recent news is imperative. These two pieces of information will likely impact the price of a copper stock.
Why is the price of copper going up? A lot of copper’s success can be attributed to electric vehicles. As you may know, electric vehicles are the largest growing automotive niche. It seems like EVs are going to be the future of the automobile, growing in sales every year. Copper is used in a variety of components in electric vehicles, and cannot be replaced by any other metal.
Another material that is fast growing at the moment is iron ore. This metal is one of the main profit sources for a lot of companies. Chinese steel mills have ramped up production and there is a lot of demand for the metal, which caused it to reach a new record high price last week. As the world continues to normalize it is helping steel prices move higher as industrial demand increases. Keeping all of this in mind, let’s look at some mining stocks that are related to the industries mentioned above.
Top Mining Stocks To Buy [Or Sell]
Vale S.A. (NYSE: VALE)
Vale is a mining company that produces and sells iron ore for steelmaking. The company also produces and extracts nickel, copper, gold, silver, cobalt, and others. Due to the rising prices for iron ore, Vale has been performing well in 2021. In a recent securities filing, the company reported that its quarterly production rose 14.2% year over year. Its net operating revenue grew 81% year over year as well to about $12.6 billion.
Right now Vale is “closely analyzing” the possibility of creating a spinoff of its base metals division. This could help Vale dive into the market for electric vehicles. The director of base metals at the company, Mark Travers said, “More and more, we’re focusing on copper and nickel as key for our participation in the de-carbonization of the economy. Clearly, we are going down that path of EV penetration in the auto industry and the inclusion of nickel in the batteries of those vehicles.”
Rio Tinto Group (NYSE: RIO)
Rio Tinto Group is a mining, exploration, and mineral processing company operating worldwide. Its main resources are copper, aluminum, gold, diamonds, and iron ore among others. Recently the company released its first quarter production results. The company had good operating performance during this period. Rio is keeping all of its current guidance ranges for all of its products as 2021 continues.
Speaking on the future, Rio Tinto’s Chief Executive Jakob Stausholm said, “Our focus is to become the best operator, strive for impeccable ESG credentials, excel in development and secure a strong social license. This ambition will enable us to continue to deliver superior returns to shareholders, invest in sustaining and growing our portfolio, and make a broader contribution to society.”
If copper and iron ore prices continue to rise it is possible for Rio to keep up this solid performance. Rio has a history of positive market performance, being nearly double its stock price from one year ago. It will be interesting to see what the company’s future performance looks like.
Freeport-McMoRan Inc. (NYSE: FCX)
When talking about copper stocks it is hard to not mention Freeport-McMoRan Inc. Freeport-McMoRan is a mining company focused on copper, gold, silver, molybdenum and more. The company is the largest publicly traded copper miner. It searches for these minerals in North America, Indonesia, and South America. FCX stock has increased by more than 320% in the last year.
The reason that FCX stock has seen such impressive momentum has to do with higher mineral prices. The company has also grown its earnings per share in the last year, from losses to profit. Currently Freeport-McMoRan is increasing the rate of production at its mines right as copper is skyrocketing in price. Freeport-McMoRan also just reported higher copper output than an average of analysts’ estimates compiled by Bloomberg. On May 3rd, FCX stock price is up 2.8% in the market.
In regards to this increased demand for copper and clean energy, Richard C. Adkerson, Chairman and CEO of Freeport-McMoRan said, “As a leading responsible copper producer, we are well positioned to support accelerating demand for copper, which is critically important for the technological advancements necessary to develop and deliver clean energy and support global decarbonization.”
What Could Happen To Mining Stocks Now?
Do you think that copper and iron ore prices will continue to grow in price at this current rate? Or will there be a fall off point where prices stagnate? Currently the future of these minerals is unknown. What we do know is that many mining stocks are performing well as a result of these rising mineral prices. This is likely to cause companies to increase the rate of production in order to make the most of these higher prices. Will you invest in mining stocks now that you have all of this information?
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