Freeport-McMoRan Inc. (NYSE: FCX) shares have dropped more than 29 percent year to date, closing at $29.26 on June 30. The majority of the losses are due to the drop in copper prices in June. However, the business anticipates sustained growth because demand for the metal is unlikely to fall.
Mining firm shares frequently track the price trend of the key raw material produced by the company. It’s copper for Freeport-McMoRan Inc. (FCX), the world’s third-largest metal producer.
Copper prices have climbed dramatically in the last three years, and some long-term investors see the recent price dip as merely a correction. This comes as no surprise given that copper was five times cheaper in the 1980s than it is now.
The global economy requires more copper as the number of electric vehicles, wind farms, electric motors, and other applications grow. These trends are so significant and long-term that major mining corporations continue to invest extensively in boosting production.
In terms of investment rates, Freeport-McMoRan Inc. (FCX) is the market leader. The corporation is on the verge of commencing a copper mining operation at an Indonesian site. This will allow Freeport-McMoRan to more than treble its output by 2024 when compared to 2020.
Management at Freeport-McMoRan Inc. (FCX) anticipates that copper demand will exceed current capacity in 2023. However, other businesses are unlikely to be able to ramp up output as rapidly as Freeport-McMoRan.
The automobile sector is a major growth engine for Freeport-McMoRan Inc. (FCX). Leading automakers have unveiled ambitious plans to convert to electric vehicles as soon as possible. As a result, General Motors intends to totally transition to electric chassis by 2035, while Ford intends to build at least 50% of its vehicles with an electric motor by 2030.
Hybrid and electric vehicles contain three to four times the amount of copper found in internal combustion engine automobiles. As a result, Freeport-McMoRan Inc. (FCX) has cause to be upbeat.