What Market Correction? Copper Is Touching an All-Time High -- Here's How to Profit From It.

While the equity markets are in correction mode, it's easy to lose sight of the fact that the price of copper is almost touching an all-time high at around $5.10 per pound. One of the best ways to make money from it is by investing in copper and gold miner Freeport-McMoRan (NYSE: FCX). Here's why.

The price of copper is near a record

By "price," I'm referring to the Chicago Mercantile Exchange (CME) March futures price, which reflects the U.S. copper market. The CME copper price is up 27% year to date. The price on the more globally focused London Metal Exchange (LME) hasn't quite matched the CME price in terms of nearing an all-time high, but it's still up almost 14% year to date.

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I refer to the price differentials because they reflect a fear that the Trump administration will impose tariffs on imported copper. Thus, U.S. users and speculators may be buying ahead of potential tariffs.

It's tough to know whether President Trump will impose tariffs on copper, but we do know a few things about the subject:

• Trump has asked the Commerce Department to look at copper tariffs.
• About 45% of U.S. domestic consumption of copper comes from imports, and it's a crucial metal to support the megatrend of electrification of everything, including renewable energy, electric vehicles, connected devices, industrial automation, smart buildings and infrastructure, electricity networks, and data centers to support AI growth
• Whether the administration applies tariffs or not, based on current policies and rhetoric, it will likely engage in some form of protectionism or encourage domestic production of copper
• A rise in the CME price will push up the LME price, too.

Given the bullet points above, we can also confidently say that Freeport-McMoRan is a winner. There are three key reasons:

Image source: Getty Images.

1. Freeport-McMoRan produces copper in the U.S.

A breakout of its copper production volumes in 2024 illustrates that it is a significant producer in the U.S. As CEO Kathleen Quirk said on the last earnings call when discussing U.S. production: "We basically sell all of our product in the U.S. The U.S., as a market itself, does import copper, but we do not export copper from the U.S."

As such, Freeport's U.S. production will not be subject to retaliatory tariffs by other countries. This means it can benefit from the surge in CME prices.

Data source: Freeport-McMoRan.

Besides the company's role as a significant player in U.S. production, it should be noted that its unit net cash cost of production of copper, $3.04 a pound, is a lot higher in the U.S. (based on fourth-quarter 2024 figures) than the other two regions: $2.36 per pound for South America, and a net cash credit of $0.08 per pound in Indonesia.

That's a plus: It means it's much more leveraged to a percentage increase in U.S. copper pricing because it has relatively high fixed costs.

2. Its global production doesn't come into the U.S.

Quirk also said that Freeport's production in Indonesia will "generally go to Asia." And its production in South America (Chile and Peru) "generally" doesn't go to the U.S. In other words, its international production won't suffer from U.S.-imposed tariffs and will benefit from an increased LME price.

3. Freeport-McMoRan can and will produce more copper in the U.S.

If protectionist measures are put in place, whether by tariffs or other means, and/or the administration encourages domestic production, then Freeport has production expansion possibilities in place.

It's low-cost leaching initiative is already operative, and management plans to produce 300 million to 400 million pounds of copper from the initiative in 2026, up from 214 million pounds in 2024. The longer-term plan is to hit 800 million pounds in annual production by 2030.

As for expansions, management believes it can at least double its current production of 300 million pounds of copper in Lone Star, Arizona, with a brownfield expansion that's in its feasibility stage now. And it is set to decide by year's end on an expansion project in Bagdad, Arizona, which could lead to 200 million pounds to 250 million pounds in incremental production with a start-up in 2029.

A stock to buy?

The miner stands to benefit across a range of scenarios, and with the price of copper at $5 per pound, management estimates it will generate $15 billion in earnings before interest, taxes, depreciation, and amortization (EBITDA) in 2026 and 2027. Given that the company's current market cap is just $58.1 billion, it suggests Freeport-McMoRan is very undervalued if copper stays at this price.

Should you invest $1,000 in Freeport-McMoRan right now?

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Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.