Commodities that get us to net zero - 4 new charts on Copper

Top 10 copper mines, biggest copper firms, BHP and Freeport

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Contrary to conventional wisdom, in order to get us to the net zero emissions target, we actually need to mine more commodities.

These commodities will go into building key products and infrastructure for a greener future, such as electric vehicles or nuclear power plants.

Today we will look at copper. Why? It’s a key commodity that goes into solar panels, wind farms, electric vehicles, and electricity grids, to name a few.

Copper assets are highly concentrated in a few countries, notably Latin American countries such as Chile and Peru. Of the top 10 copper mines, 3 are in Chile, and 3 are in Peru.

But these copper assets are controlled mostly by mining companies in developed countries. Codelco is a Chilean government entity and the largest copper producer. Freeport, Glencore and BHP are the next 3 largest and together produce close to 3 million tons of copper a year, about 15% of global production.

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Next, we will take a look at the two largest public mining companies: BHP and Freeport, and see how they make money and their profitability.

Despite being the 4th largest copper producer, BHP actually makes most revenue as well as profits from its iron ore operations. Mining companies are highly volatile and cyclical, but when times are good, it’s really good! With a 52% operating margin and 34% net profit margin, it’s even better than Apple or Microsoft! Sadly it’s still making about $9B in operating profits from coal.

Freeport-McMoran is a copper specialist mining company. It’s the 2nd largest copper producer in the world, 40% larger than BHP’s copper production. It makes just about the same operating margin around 37% as BHP, despite having 40% more production.

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That’s all for today. Next Wednesday we will be back with some new charts on lithium!

Have a great weekend!

Truman

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