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Copper prices are exploding, cementing the red metal’s status as the new gold. On the London Metal Exchange (LME), prices hit a record high of $11,210 per ton last Friday, and rallied as high as $11,294 today before easing back below $11,190 per ton. Stateside, Comex futures climbed 1.6% to four-month highs around $5.327 per pound, reflecting a 1% daily gain amid frenzied trading.

Fears of a global supply crunch are causing the frenzy: unplanned mine disruptions have plagued the industry for over a year, while tense negotiations between smelters and miners have spiked ore premiums. Major trader Mercuria Energy Group told an industry conference in Shanghai, "This is the big one," expecting prices to ratchet up even higher.

On the demand side, copper's irreplaceable role in the energy transition is turbocharging prices. Electric vehicles, renewable grids, and AI data centers guzzle the red metal, outpacing sluggish mine expansions. As Mercuria's Kostas Bintas, "Supply fears are gripping the market," positioning copper as the new gold for investors eyeing scarcity-driven gains. Amid this boom, Freeport-McMoRan (FCX) stands as the best-positioned copper stock to capitalize on tight supplies and soaring prices.

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A Copper Powerhouse

Freeport is the world's largest publicly traded copper producer, boasting an unmatched portfolio that makes it the premier play in this red-hot market. With operations spanning the Americas, Africa, and Indonesia, FCX churns out over 3.5 billion pounds of copper annually, plus significant gold and molybdenum byproducts that buffer volatility. Its crown jewel – the Grasberg mine in Indonesia – is one of the planet's richest deposits, yielding both copper and gold.

A September mudslide there halted production, claiming lives and prompting FCX to declare force majeure – a legal clause excusing contract fulfillment due to uncontrollable events like natural disasters. This suspended shipments without penalties, buying time for safety assessments. FCX recently announced a phased restart for Q2 2026, with partial output already resuming from unaffected zones. By 2027, Grasberg is slated to ramp to 1.6 billion pounds of copper and 1.3 million ounces of gold annually through 2029, restoring full might.

Why Freeport Stands Above the Competition

What sets FCX apart from peers like Southern Copper (SCCO) and BHP (BHP) is its scale and cost efficiency. Its North American assets, including the massive Morenci mine in Arizona, deliver some of the lowest production costs – around $1.50 per pound – insulating margins as prices top $5. Low breakeven points mean outsized profits in a rally, with every penny above costs flowing straight to the bottom line.

FCX's diversification shines too: 80% of its revenue comes from copper, but gold from Grasberg adds a shiny hedge against pure-play risks. Unlike smaller miners grappling with single-asset woes, FCX's global footprint mitigates geopolitical hiccups, from Indonesian regulations to U.S. labor issues.

Earnings are forecast to grow at a 23% compound annual rate over the next five years, driven by higher volumes and prices. At a PEG ratio well below 2 – factoring growth into its 21x forward P/E – FCX trades at a discount to its potential, far cheaper than gold miners amid similar hype.

Bottom Line

FCX is a strong buy for copper bulls. With record prices fueling strong earnings growth through 2030, a sub-2 PEG ratio signals undervaluation, and the Grasberg restart unlocking billions in output, the copper miner is primed to outperform. At $43 per share, Freeport-McMoRan offers an attractive entry point before the next leg higher.

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