Copper is needed for artificial intelligence data centres, electric vehicles, and to upgrade and expand aging electrical grids.Rogan Ward/Reuters
Copper, often called “red gold,” is having a moment.
The benchmark, three-month London Metal Exchange LME copper price hit a record high of US$14,527 a tonne on Jan. 29 after surging 44 per cent last year. It has retreated to about US$12,954 a tonne amid market volatility from the Iran war.
Even with the pullback, some fund managers remain optimistic about the outlook for this base metal, citing strong demand and limited supply, while takeover activity can also provide attractive returns.
“We are bullish on copper over the medium to long term,” as demand explodes from non-traditional sources, says Shree Kargutkar, senior portfolio manager at Sprott Asset Management LP in Toronto.
Copper is needed for large artificial intelligence data centres, which can use up to 50,000 tonnes of the metal, he says, and electric vehicles require three to four times more copper than vehicles with internal combustion engines.
Copper is also needed to upgrade and expand aging electrical grids, and there’s “no scaling back,” says Mr. Kargutkar, co-manager of Sprott Active Metals and Miners ETF METL-Q.
In 2025, copper supply became tight because of mine disruptions, which included flooding at Freeport McMoRan Inc.’s FCX-N Grasberg mine in Indonesia and Ivanhoe Mines Ltd.’s IVN-T Kamoa-Kakula’s mine in the Democratic Republic of Congo (DRC).
To entice new production, higher copper prices are needed to make new and expanded mine projects viable, Mr. Kargutkar says.
Copper will likely need to reach US$15,000 or US$16,000 a tonne before the big miners invest in development-stage projects, he says.
Mergers and acquisitions intensified last year to secure copper supply. After rejecting a takeover by Australian mining giant BHP Group Ltd. BHP-N, London-based Anglo American PLC struck a deal last fall to acquire Vancouver’s Teck Resources Ltd. TECK.B-T.
Mr. Kargutkar expects more takeovers, but with miners focused on friendly jurisdictions with stable politics and operating guidelines, such as Canada, the U.S. and Australia.
Much of the growth in the copper supply during the past decade came from politically unstable areas such as the DRC because of better economics, he says.
The Sprott ETF has 30 per cent in copper names, he says, including Hudbay Minerals Inc. HBM-T, Ero Copper Corp. ERO-T, Capstone Copper Corp. CS-T and Freeport-McMoRan.
Jeremy Lin, portfolio manager at Purpose Investments Inc. in Toronto, also has a positive outlook for copper, saying he believes the metal’s price could even double in a couple of years.
“We don’t have a lot of major copper discoveries,” and there isn’t a good alternative for copper used for data centres and the electrical grid, says Mr. Lin, who oversees Purpose Global Resource Fund.
Fears of tariffs on imported copper have also led to parties stockpiling the metal in the U.S., so buyers are moving to a “just-in-case versus a just-in-time model,” he notes.
His fund’s copper exposure fell to 13 per cent on March 3 after selling most of his shares in Arizona Sonoran Copper Co. ASCU-T. Hudbay Minerals had announced a deal to acquire Arizona Sonoran at a 30-per-cent premium to its closing price.
“I will deploy the capital in other copper names,” Mr. Lin says, adding he prefers owning explorers and developers because their shares have a greater chance of multiple expansion.
His fund also holds Faraday Copper Corp. FDY-T, which has copper assets in Arizona. Last month, Faraday agreed to buy the nearby San Manuel copper property in Arizona from BHP Group. The transaction also gives BHP a 30-per-cent stake in Faraday, and one day BHP could bid for the rest, he says.
“You want to be in the U.S. in case President Trump announces a copper tariff,” he says.
Mr. Lin also owns shares of Magna Mining Inc. NICU-X, which has copper assets near Sudbury, Ont. Magna’s McCreedy West mine is a producing asset, while it has some “pretty good exploration prospects” from its Levack and Crean Hill mines, he adds.
Nawojka Wachowiak, senior portfolio manager at Ninepoint Partners LP in Toronto, is also bullish on copper and sees the recent market volatility as a “buying opportunity” to add to her exposure.
“Our base case for copper is that supply is needed. And for supply to come onstream, the price needs to be higher for longer,” says Ms. Wachowiak, who oversees Ninepoint Mining Evolution Fund, which has an 18-per-cent exposure to copper names.
Hudbay’s decision to acquire the outstanding shares of Arizona Sonoran Copper – which is the Ninepoint fund’s largest holding – shows copper assets are appealing and takeovers will likely continue, Ms. Wachowiak says. She plans to take Hudbay shares when the deal closes.
Her fund will own copper developers, exploration companies and producers. “I am a geologist, so I am quite comfortable taking a view on the potential of earlier-stage names,” she says.
One of her top holdings is Osisko Metals Inc. OM-T, which has an early-stage copper project in Quebec’s Gaspé Peninsula and whose investors include Hudbay and Glencore PLC. It’s possible they could be potential bidders for Osisko down the road, she says.
Her fund owns producers such as Ero Copper and Freeport-McMoran. She says Freeport expects its Grasberg mine in Indonesia to be fully back online in 2027 after the flooding.
Despite the positive drivers for copper demand, there are risks from potentially slowing global growth as well as a strong U.S. dollar, as commodities are denominated in the greenback, she says.
“Ultimately, we’re more likely to have a weaker than a stronger U.S. dollar,” Ms. Wachowiak says. “That helps us get more comfortable with the copper trade.”