Freeport-McMoRan targets 4.1B lbs copper by 2028 in supercycle play

Freeport-McMoRan offers investors exposure to the metals supercycle without the execution risk tied to rare-earth upstarts like MP Materials.

Copper demand from AI data centers, electric vehicles, and renewable energy infrastructure is projected to outpace supply growth, with LME copper settling near $13,000 per metric ton after hitting a record $14,527.50 on Jan. 29, according to exchange data. Freeport-McMoRan Inc. (NYSE: FCX) is positioned to capture that demand through a production pipeline that targets 4.1 billion lbs of copper by 2028, up from a forecast 3.1 billion lbs in 2026.

"The structural deficit in copper is driven by demand that supply simply cannot match within this decade," Goldman Sachs analysts wrote in a recent note, projecting U.S. data center power demand will reach 47 gigawatts by 2030, a 176% increase from current levels. Each megawatt of data center capacity requires 6 to 8 tonnes of copper for power distribution and cooling, translating to an additional 180,000 to 240,000 tonnes of demand from new U.S. data centers alone by 2030, per the bank's estimates.

Freeport-McMoRan's expansion strategy rests on three pillars. The company's cost-effective leaching initiative targets 400 million lbs of additional copper per year by 2027 and 800 million lbs per year by 2030 by recovering metal from existing material stockpiles. In the U.S., management believes it can expand production from 1.2 billion lbs to 2 billion lbs by 2030 through a combination of leaching and brownfield projects. The company reported a current ratio of 2.29 and net debt-to-EBITDA of 0.93, indicating balance sheet capacity to fund the expansion.

The contrast with MP Materials (NYSE: MP) highlights the risk differential. The rare-earth miner is constructing a magnet manufacturing facility in Northlake, Texas, known as "10X," and carries execution risk tied to construction timelines and technology acquisition. Recent Chinese export controls on rare-earth processing equipment have made it harder for the company to secure the technology needed for its downstream operations. While MP Materials benefits from a U.S. Department of Defense partnership that includes a 10-year pricing floor guarantee, the stock carries risks beyond the broad metals supercycle thesis.

Copper supply faces structural constraints

On the supply side, the industry faces a 17-year average timeline from discovery to production for new mines, according to S&P Global data. Ore grades have declined 40% since 1991, meaning more rock must be processed for each tonne of copper. S&P Global estimates the world needs to discover and develop the equivalent of a new Escondida mine — the world's largest copper operation — every year for the next 30 years to meet projected demand. Global inventories sit below three weeks of consumption, and recycling covers only 30% to 32% of needs.

Electric vehicles use 80 to 100 kg of copper per unit, roughly four times the 20 to 30 kg in internal combustion engine vehicles. A single wind turbine requires 3 tonnes of copper per megawatt of capacity. Bank of America projects copper could reach $20,000 per tonne by 2026 and $25,000 to $30,000 per tonne by the early 2030s if AI-driven demand continues its current trajectory.

Freeport-McMoRan's production recovery from a 2024 traffic accident in Indonesia is on track, with management forecasting 3.8 billion lbs of copper sales in 2027 and 4.1 billion in 2028. The company's U.S. operations, centered on Arizona's Bagdad mine and the Safford complex, form the backbone of its domestic expansion plan. Among copper peers, Southern Copper Corp. (NYSE: SCCO) reported a gross margin of 56.7% and return on equity of 42.2%, while BHP Group (NYSE: BHP) and Rio Tinto (NYSE: RIO) offer diversified exposure with dividend yields of 3.66% and 4.43%, respectively.

This article is for informational purposes only and does not constitute investment advice.