Copper rose by 2% to $9,066.50 a ton on the London Metal Exchange on Friday 15 March 2024 even as other metals were mixed, with aluminum gaining 0.6% and lead dropping 1.8%. After the rally, a leading analyst in Sydney sent a list of the top five mining stocks to Cobre Ltd Executive Director, Martin Holland. The list includes big names such as BHP and companies with strong potential and innovative methods such as Cobre Limited. 

Why does this matter? 

Copper prices are diverging from Iron Ore as the love story between investors and the latter wanes. Last week, copper prices rose 2% to over $9,066.50 per ton on the London Metal Stock Exchange. With the energy transition in full swing, copper will play an important role in the manufacturing of wind turbines, thermal, electric vehicles, and solar. 

What is driving the rally in copper prices

Copper prices are rallying, driven by the tightening of supply in global mine supply. The closure of a major mine in Panama last year and worries about low Zambian copper production due to the El Niño-induced power crisis are pushing prices higher. Meanwhile, in 2022, copper demand from China, the European Union (EU), and the United Kingdom (UK) reached 10.8 million metric tons. In 2024, analysts forecast copper demand could rise to 28 million metric tons, which will drive the rally in prices and support mining stocks across the world.

Cobre Limited (ASX: $CBE): Market Capitalisation of AUD $18.21 Million

Cobre Limited (ASX: $CBE) is an exploration company with copper prospects in the Kalahari Copper Belt and the company has signed an agreement giving it 100% in licenses for investment and exploration. Cobre’s four projects include the KCB: Okavango (2,720 km squared), Kitalnya East (2,650 km squared), Ngami (720 km squared) and Kitalnya West (2,900 km squared). Its project in Botswana is well-placed to make it a major producer of copper, serving both Europe and Asia easily. Cobre Limited (ASX: $CBE) presents an intriguing observation on the weekly chart. Initially, the ten-week simple moving average served as resistance, but it's now functioning as reliable support, indicating a potential shift in sentiment.

WIRE-ETF: Market Capitalisation of AUD $161 Million

Global X Copper Miners ETF (WIRE) provides access to a global basket of copper mines, which stand to benefit from being a part of the renewable energy value chain. Global X Copper Miners (WIRE) aims to provide investors with a return that (before fees and expenses) tracks the performance of the Solactive Global Copper Miners Total Returns it has performed well in the last year and the share price rose 14.01% in the last year. So it is a strong contender to be a top performer in the ASX stock exchange. 

BHP Group Ltd (ASX: $BHP): Market Capitalisation of AUD $ 223.78 billion

BHP is the world's largest mining company by market capitalisation, a leading producer of iron ore, copper, metallurgical coal, and nickel, and is moving into potash. It currently has a major buy rating from the Australian Broker Citi, with a price target of $46 in the next 12 months. At the current BHP share price – which is up more than 2%  that would suggest a potential rise of close to 7% over the next 12 months. The value to earnings before interest, tax, depreciation, and amortization (EBITDA) ratio is 5 times, compared to the long-term average of 6.3 times. The price-to-cash flow ratio is 6.4 times, compared to the long-term average of 8 times. Based on these two ratios, BHP looks materially cheap based on these two points, BHP looks cheap and signals a strong buy. 

Freeport-McMoRan Inc. (FCX): $600 billion 

Freeport-McMoRan Inc., often called Freeport, is an American mining company based in the Freeport-McMoRan Center, in Phoenix, Arizona. The company is the world's largest producer of molybdenum, is a major copper producer, and operates the world's largest gold mine, the Grasberg mine in Papua, Indonesia. Freeport-McMoRan is a good stock to hold as it currently with 7 holds and 6 by-ratings from Wall Street Analysts, with a price target of $45.73 from 3 analysts. However, the stock has risen by 20.26% over the last year, with a consistent upward momentum that suggests further upside for the stock. 

Sandfire Resources Ltd (ASX: $SFR): Market Capitalisation of AUD $3.7 billion

Sandfire Resources Limited is a mining company that engages in the exploration, evaluation, and development of mineral tenements and projects. They are a dynamic mid-tier Australian mining and exploration company that joined Australia’s successful copper producers in 2012 after it 100% commissioned its DeGrussa Copper-Gold Mine, located 900km north of Perth in Western Australia. Sandfire Resources' share price has risen by 2% today to $8.69 and over the last year, the share price has risen by 17.91%. 

Moxico-London AIM (Zambia)

The UK-based company, run by ex-Rio Tinto executive Alan Davies, is developing its flagship Mimbula project in Zambia's copper belt but also has other assets under development. Moxico is the operator of an exploration mining company intended to identify, secure, and add value to mineral assets in Africa. The company has a portfolio of scalable copper, cobalt, and zinc projects of metal extraction, enabling clients to meet their project and metal needs economically.

Copper prices have risen and related stocks are expected to benefit over the medium term. The recent rally will likely persist, driven by continued demand for mineral resources linked to the energy transition across most advanced economies. The list above includes a variety of companies that are set to benefit from renewed copper and mineral demand over the long run. Analysts believe these stocks have strong potential and will likely outperform over the long run. This rings bells as a “buying” opportunity.