Copper may be one of the most important strategic commodities of the next decade. Think:
Electrification.
AI infrastructure.
Data centres.
Grid expansion.
EVs.
Defence spending.
All roads increasingly lead back to copper.
At the 2025 Energy Business Summit at the University of Southern California Marshall School of Business, billionaire mining entrepreneur Robert Friedland delivered a tour de force dissertation on critical minerals and the raw materials supply chain.
His message was clear and sobering: The world has an insatiable thirst for metals, from surging military budgets to AI data centres and the greening of the global economy, but it does not have a credible way to supply the metals it intends to consume over the next few decades. In relation to copper, he said:
“How much copper are we using? We’re consuming 30 million tonnes of copper a year, only 4 million tonnes of which is recycled. That means to maintain 3% GDP growth…..now listen carefully, with no electrification…this is with burning oil and gas. To maintain global 3% GDP growth, we have to mine the same amount of copper in the next 18 years as we mined in the last 10,000 years (combined). In the next 18 years, I’ve got to mine the same amount of copper as we mined the last 10,000 years…without electrification, without data centers, without solar and wind and the greening of the world economy. You people have no idea whatsoever what we’re facing. You’re dreaming.”
And when investors think about large-scale copper exposure, one name immediately comes to mind:
Freeport-McMoRan (FCX)
The world’s largest listed copper producer.
Despite very strong stock performance, we think FCX is approximately fairly valued — even after adjusting for temporary operational disruptions.
In this video, we’ll explain why.
First our Disclaimer
Please note, this video and note is intended to be general educational content and not investment advice. We do not take any responsibility for the content – which may contain errors. You should always do your own research and obtain professional financial advice tailored to your own circumstances and risk profile.
WHAT FCX ACTUALLY IS
FCX is not simply a copper miner.
It’s really a portfolio of giant long-life copper systems spread across:
the United States,
South America,
and Indonesia.
The crown jewel is the massive:
Grasberg Mine
One of the largest copper and gold deposits ever discovered.
FCX also owns major interests in:
Morenci Mine
Cerro Verde Mine
El Abra Mine
And importantly:
FCX is also a meaningful gold and molybdenum producer.
THE GRASBERG DISTORTION
One of the most important things investors need to understand is this:
2026 is not a normal earnings year.
Production has been impacted by operational disruptions at Grasberg, caused by a gigantic mudslide and cave-ins in 2025.
This significantly affected production and revenues last year.
However, the company has told us that things are normalising and that we should be back at normal production over the coming months.
So current earnings likely understate FCX’s normalised earning power.
Our steady-state assumptions ignore the temporary outage and assume approximately:
4.2 billion pounds of copper production
1.8 million ounces of gold
90 million pounds of molybdenum
At commodity prices of:
$5 copper
$4,000 gold
and $25 molybdenum
we estimate normalised EBITDA of approximately:
$14.5 billion annually.
By comparison, during the Grasberg disruption period we estimate EBITDA closer to:
approximately $11 billion.
That’s a very material difference.
THE HIDDEN GOLD EFFECT
This is where FCX becomes especially interesting.
Most people think of FCX as just a copper miner.
But economically, the gold matters enormously.
Why?
Because gold acts as a by-product credit.
In simple terms:
FCX treats Gold revenue as an offset against copper extraction costs.
Grasberg produces copious volumes of gold.
So under normalised conditions, strong gold production can significantly reduce FCX’s net copper production. On our assumptions, FCX’s Cu extraction costs are roughly:
$1.40 per pound.
That is very low and extraordinarily powerful operational leverage.
However, during the Grasberg outage:
gold production fell,
by-product credits fell,
and copper costs rose materially.
This is why FCX earnings can swing so dramatically.
THERE IS AN IMPORTANT THING MOST INVESTORS MISS
This is probably the most important part of the analysis.
FCX does NOT economically own 100% of its international mines.
The market often overlooks this.
For example:
FCX owns only around 49% of Grasberg economically (and this % is reducing by about 1% per year over the next decade).
Morenci is only around 72% owned.
Cerro Verde in Peru is around 55% owned.
El Abra in Chile is around 51% owned.
So while FCX consolidates 100% of all these operations for accounting purposes, a very large portion of the economics belongs to joint venture partners and non-controlling interests.
And this matters enormously when calculating intrinsic value.
Because when investors value FCX on EBITDA multiples alone, they can accidentally overstate the value attributable to FCX shareholders. “This is critical because many retail investors simply apply an EBITDA multiple to consolidated earnings without properly deducting the value attributable to joint venture partners.”
We have calculated the enterprise value of each of these mines and have deducted the Non Controlling % of each from FCX’s overall fully consolidated value.
OUR VALUATION FRAMEWORK
Using our assumptions, we estimate enterprise value at approximately:
$143 billion.
However, after deducting:
Net Debt,
The NPV of Non Controlling Interests
employee equity,
and other claims,
we arrive at an intrinsic equity value estimate of approximately
$93 Billion Market Cap.
Or about
$64 to $65 per share.
With the stock currently trading around:
approximately $62 per share,
our view is that:
FCX appears broadly fairly valued under our base assumptions.
THE BULL CASE
That said, there absolutely is a bull case.
And it’s substantial.
If copper prices move materially above $5 per pound and remain there for years — not months — FCX’s earnings power changes dramatically.
Remember:
Every additional dollar in copper price flows through billions of pounds of annual production.
And because mining is operationally leveraged, incremental margins can be enormous.
Long-term copper scarcity is also real.
At lower copper prices, reserve lives shorten materially.
At higher copper prices, more resources become much more economic.
That optionality has value.
As an example, the company has said that at a long term Cu price of $3.25/ lb (a conservative estimate), their reserves would be roughly equivalent to 27 years of normal production.
However, if this assumption is increased by only $0.50 / lb to $3.75, this increases reserve life another 12 years to 39 years.
At our assumed $5 price, reserve would be much greater and the intrinsic value of that resource is magnified substantially. Today, spot copper is trading above $6 a pound.
THE RISKS
But there are also major risks.
And investors should understand them.
These include:
sovereign risk in Indonesia,
future dilution of economic interests of offshore mines,
cost inflation,
energy market disruptions, eg if Iran conflict continues to keep energy prices escalated
and, of course, copper price cyclicality.
Our research is showing a global copper market which is quite balanced, where supply and industrial demand are roughly in synch.
Part of the recent price strength may reflect inventory accumulation, strategic stockpiling and speculative positioning ahead of anticipated future shortages.
A global recession caused by high inflation and energy prices may knock the wind out of industrial demand for Copper.
FCX is not a utility.
This is a highly cyclical global resource company.
You normally don’t want to buy these at the top of a cycle.
So where do we land?
We believe FCX is:
a world-class copper asset base,
with enormous long-term strategic relevance,
but currently trading broadly around fair value under our assumptions.
Very attractive if you believe the $6+ copper price is here to stay
The stock could become extremely attractive:
during operational disruptions,
a commodity panic downturn,
or broader market selloffs.
But at current prices, we think investors should remain disciplined and valuation-focused.
Diving in head first and buying the whole position at these levels might be risky. We’d rather dollar cost average and accumulate on weakness.
Because in mining — as in investing generally —
the quality of the asset matters,
but the price you pay matters just as much.
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Thank you for listening.
Please note, this video and note is intended to be general educational content and not investment advice. We do not take any responsibility for the content – which may contain errors. You should always do your own research and obtain professional financial advice tailored to your own circumstances and risk profile.
