Equity, Bottom-up Analyst, Investics Research

Sameer Taneja

Equity, Bottom-up Analyst

Investics Research

It is important to note that the information provided by Investics Research is based on publicly available data and own knowledge, which has been gathered and analyzed from a variety of sources. While every effort has been made to ensure the accuracy and completeness of the information provided, it is not guaranteed to be free from errors or omissions. All forecasts and estimates are based on information that has been obtained from public sources that are considered to be reliable. The sources include but are not limited to, company announcements, exchange filings, presentations, etc. Investics does not guarantee the accuracy and completeness of the forecasts, estimates, and/or other information.

Equity Bottom-up Research

Equity Bottom-Up

<ul>
<li>A significant production impact from the suspension of its Grasberg Block Cave mine in Indonesia, following a deadly mud rush incident, could lead to a spike in copper prices.</li>
<li>The force majeure in the <a href="https://www.smartkarma.com/entities/freeport-mcmoran-inc" target="_blank" data-smartkarma-citation="entities:12491:1" rel="noopener">Freeport Mcmoran (FCX US)</a> mine will take out <a href="https://www.smartkarma.com/insights/post-results-fy24-mine-by-mine-plan-production-commentary-on-copper-from-global-listed-companies" target="_blank" rel="noopener">700,000 tons</a> of annualized production in the foreseeable future (&gt;2.5% of global copper production).</li>
<li>Copper players like <a href="https://www.smartkarma.com/entities/southern-copper-corp" target="_blank" data-smartkarma-citation="entities:16279:1" rel="noopener">Southern Copper (SCCO US)</a>, <a href="https://www.smartkarma.com/entities/antofagasta-plc" target="_blank" data-smartkarma-citation="entities:21814:1" rel="noopener">Antofagasta PLC (ANTO LN)</a>, and <a href="https://www.smartkarma.com/entities/teck-resources-ltd-36dbdad5-1430-4d7a-8578-31bc50086f72" target="_blank" data-smartkarma-citation="entities:33343:1" rel="noopener">Teck Resources (TECK US)</a> would be beneficiaries, while <a target="_blank" rel="noopener">Freeport Mcmoran (FCX US)</a> could be significantly affected.</li>
</ul>


A significant production impact from the suspension of its Grasberg Block Cave mine in Indonesia, following a deadly mud rush incident, could lead to a spike in copper prices.
The force majeure in the Freeport Mcmoran (FCX US) mine will take out 700,000 tons of annualized production in the foreseeable future (&gt;2.5% of global copper production).
Copper players like Southern Copper (SCCO US), Antofagasta PLC (ANTO LN), and Teck Resources (TECK US) would be beneficiaries, while Freeport Mcmoran (FCX US) could be significantly affected.


Copper Prices to Rally To 11k USD/Ton Due To Grasberg Force Majeure

Global Materials | Industrials | Commodities

Rahul Jain

<ul>
<li>Anglo and Teck have decided to merge, creating a ~$53bn copper-focused mining major that ranks #4 globally with ~1.2 Mt of output in 2024.</li>
<li>The deal targets ~$800m in annual savings by year four, though history suggests full delivery is unlikely.</li>
<li>The combined group offers strong leverage to copper’s structural growth and top-3 scale in seaborne met coal as a cash engine.</li>
</ul>


Anglo and Teck have decided to merge, creating a ~$53bn copper-focused mining major that ranks #4 globally with ~1.2 Mt of output in 2024.
The deal targets ~$800m in annual savings by year four, though history suggests full delivery is unlikely.
The combined group offers strong leverage to copper’s structural growth and top-3 scale in seaborne met coal as a cash engine.


Anglo–Teck: Building a Copper Champion with Coal Cash Flow

<ul>
<li>This is a follow-up on our piece 10 days ago <a href="https://www.smartkarma.com/insights/rate-cut-to-spur-copper-performance-in-the-short-term-to-over-10k-usd-ton" target="_blank" data-smartkarma-citation="insights:198832" rel="noopener">Rate Cut To Spur Copper Performance In The Short-Term to Over 10K USD/Ton.</a> </li>
<li>Copper, trading above USD 9,800/ton, appears poised to breach USD 10,000/ton; prospective rate cuts and supply deficits support upside, partially offset by elevated exchange inventories.</li>
<li>
<a href="https://www.smartkarma.com/entities/southern-copper-corp" target="_blank" data-smartkarma-citation="entities:16279:1" rel="noopener">Southern Copper (SCCO US)</a> and <a href="https://www.smartkarma.com/entities/antofagasta-plc" target="_blank" data-smartkarma-citation="entities:21814:1" rel="noopener">Antofagasta PLC (ANTO LN)</a> are our favorite names. The <a href="https://www.mining.com/web/first-quantum-takes-small-steps-in-long-road-to-panama-mine-restart/" target="_blank" rel="noopener">restart of the Cobre Panama</a> mine (although low probability) could boost <a target="_blank">First Quantum Minerals (FM CN)</a>.</li>
</ul>


This is a follow-up on our piece 10 days ago Rate Cut To Spur Copper Performance In The Short-Term to Over 10K USD/Ton. 
Copper, trading above USD 9,800/ton, appears poised to breach USD 10,000/ton; prospective rate cuts and supply deficits support upside, partially offset by elevated exchange inventories.

Southern Copper (SCCO US) and Antofagasta PLC (ANTO LN) are our favorite names. The restart of the Cobre Panama mine (although low probability) could boost First Quantum Minerals (FM CN).


Copper All Set To Break 10k USD/Ton In The Short-Term

<ul>
<li>Following the recent COMEX-LME trade fiasco and the underwhelming TSF data, copper's market sentiment was positively influenced by Fed Chairman Jerome Powell's indication of a potential rate cut next month.</li>
<li>We anticipate that this development could drive copper prices on the LME above $10,000 USD/ton in the near term, before a subsequent reassertion of fundamental factors.</li>
<li>Earlier, there was downward pressure on copper prices due to China's softening economic performance and the rising levels of inventory in the market.</li>
</ul>


Following the recent COMEX-LME trade fiasco and the underwhelming TSF data, copper's market sentiment was positively influenced by Fed Chairman Jerome Powell's indication of a potential rate cut next month.
We anticipate that this development could drive copper prices on the LME above $10,000 USD/ton in the near term, before a subsequent reassertion of fundamental factors.
Earlier, there was downward pressure on copper prices due to China's softening economic performance and the rising levels of inventory in the market.


Rate Cut To Spur Copper Performance In The Short-Term to Over 10K USD/Ton

<ul>
<li>The company has been able to lower costs significantly by 12% YoY, improve on its byproduct credits by 37%YoY due to gold prices increasing, while copper prices rose 3.5% YoY.</li>
<li>Production for H1FY25 rose 10% YoY, led by a ramp-up in Centinala, resulting in EBITDA/profit improving by 60% YoY. </li>
<li>While the stock trades at 25x FY25e P/E, we believe that the runway for earnings improvement is enormous as the company ramps up its volumes and manages costs.</li>
</ul>


The company has been able to lower costs significantly by 12% YoY, improve on its byproduct credits by 37%YoY due to gold prices increasing, while copper prices rose 3.5% YoY.
Production for H1FY25 rose 10% YoY, led by a ramp-up in Centinala, resulting in EBITDA/profit improving by 60% YoY. 
While the stock trades at 25x FY25e P/E, we believe that the runway for earnings improvement is enormous as the company ramps up its volumes and manages costs.


Antofagasta (ANTO LN) H1 2025: Outperforming The Pack

United Kingdom

Antofagasta plc is a Chilean multinational conglomerate primarily focused on copper mining, with operations concentrated in Chile. The company operates four copper mines, producing copper cathodes and concentrates, along with gold, silver, and molybdenum as by-products. Additionally, it has a transport division providing rail and road cargo services for mining customers in northern Chile. Antofagasta was incorporated in London in 1888 and is headquartered in London, England.

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Antofagasta (ANTO LN)

Copper Prices to Rally To 11k USD/Ton Due To Grasberg Force Majeure

We expect the Force Majeure at the Grasberg mine in Indonesia of FCX to result in copper prices breaching the $ 5/lb mark and rallying further. We...

Sameer Taneja

Anglo–Teck: Building a Copper Champion with Coal Cash Flow

Anglo and Teck merge to create $53bn copper-focused mining major, aiming for $800m in annual savings by year four with strong leverage to copper's...

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Copper All Set To Break 10k USD/Ton In The Short-Term

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Rate Cut To Spur Copper Performance In The Short-Term to Over 10K USD/Ton

Copper has a new catalyst in anticipated rate cuts by the Fed. We believe that despite the high inventories, there is a good short-term setup for...

Sameer Taneja