How to invest in copper in Australia
Copper stocks on the ASX remain one of the hottest commodities. Here’s what you should consider before investing in the asset.
Copper is among the world's most highly consumed metals. It has an abundance of uses – from our homes to industrial machinery and even plays a critical role in reaching net-zero.
If you're looking to invest in copper stocks, you can choose between pure-play copper stocks on the Australian Securities Exchange (ASX), such as Sandfire (SFR) and OZ Minerals (OZL), or you can buy miners that produce many different metals including copper, such as BHP Group (BHP).
You also have the option of investing in copper ETFs (exchange-traded funds) or trading copper futures or options.
This guide will cover how you can invest in copper stocks in Australia, along with the pros and cons, as well as the best performing copper stocks on the ASX.
Types of copper stocks
There are 2 main types of copper stocks on the ASX:
- Pure-play copper companies: These are businesses that focus exclusively on copper production.
- Large mining companies: These are miners that produce copper and a bunch of other minerals as part of a wider mining activities.
While both types of stocks will give you exposure to copper, they do come with their own specific strengths and weaknesses.
A pure copper miner has a greater exposure to copper, which could be a positive when the price of copper is rising but a downside when prices are falling.
By comparison, larger mining companies may be diversified across a number of commodities, which could be a better hedge when copper prices are struggling, but might not offer the same upside when prices are high.
If you're looking at buying copper stocks, here are a few things to watch out for:
Pros
- Multiple options to choose from
- More control over your investment
- Leave the market when you want
- You might even get dividends
Cons
- Stocks are more vulnerable to market fluctuations
- Increase your risks to just owning the commodity itself
Best ASX copper stocks
There are more than a dozen copper stocks on the ASX. We've listed the top 5 based on their performance so far in 2024 (and over the last 5 years). This list was updated on 14 June 2024 using TradingView data.
1. Australian Gold and Copper Limited (ASX: AGC)
Year-to-date performance: 480.88%
5-year performance: 97.50%
2. Kincora Copper Limited (ASX: KCC)
Year-to-date performance: 73.17%
5-year performance: -71.60%
3. Bougainville Copper Limited (ASX: BOC)
Year-to-date performance: 61.43%
5-year performance: 413.64%
4. Aeries Resources Limited (ASX: AIS)
Year-to-date performance: 58.62%
5-year performance: -39.38%
5. Cyprium Metals Limited (ASX: CYM)
Year-to-date performance: 46.67%
5-year performance: -78.00%
6. Peel Mining Limited (ASX: PEX)
Year-to-date performance: 27.27%
5-year performance: -52.67%
7. Culpeo Minerals Limited (ASX: CPO)
Year-to-date performance: 22.22%
5-year performance: -80.00%
8. AIC Mines Limited (ASX: A1M)
Year-to-date performance: 21.74%
5-year performance: 31.94%
9. Sandfire Resources (ASX: SFR)
Year-to-date performance: 17.38%
5-year performance: 40.34%
10. Caravel Minerals Limited (ASX: CVV)
Year-to-date performance: 13.89%
5-year performance: 339.65%
Buy copper ETFs
To date, there are no pure-play copper ETFs listed on the ASX, but there are some copper ETFs listed in the US. These ETFs include the following:
- Global X Copper Miners ETF (COPX)
- United States Copper Index Fund (CPER)
- iPath Series B Bloomberg Copper Subindex Total Return ETN (JJC)
Pros
- Immediate diversification into the asset class
- Don't need to identify individual copper miners that will win in the sector
Cons
- You will have to pay a management fee
- You do not take ownership of the underlying asset
How to trade copper stocks: choosing a platform
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Purchase copper futures, CFDs or other options
You can invest in the asset through its future prices without actually taking ownership of it.
In Australia, contracts for difference (CFDs) are most commonly used when it comes to trading commodities.
CFDs are derivative investment products that allow you to trade on the future prices of underlying assets such as commodities, stocks and indices.
By investing in copper CFDs, you're speculating on the price of the asset in the future. In other words, you're agreeing to pay today's prices for an asset that gets delivered sometime in the future.
If the price rises between now and the time when the CFD finishes, you'll either make or lose money depending on how the trade played out. For example if you think the price of copper will fall and trade against it, but instead the price rises, you'll lose your investment.
On the flip side, you can also place orders against copper. If you think the price will drop, you can "short" the contract. This means they put in an order to sell the asset at today's prices for delivery in the future. Now, if prices drop between the time the short contract was purchased and the contract expiry date, the trader would potentially make money. If prices rise, they could lose money.
However, CFDs are a much riskier way to gain exposure to the sector. It is not advised that beginners use CFDs.
Futures and other options work in a similar way. When it comes to future copper contracts, you're agreeing to buy an asset at a future set price. In other words, you're agreeing to pay today's prices for an asset that gets delivered sometime in the future. You can once again go long (expect the price to rise) or short (expect the price to fall) in the futures markets.
Pros
- If you can read the market, you can gain solid yields from your investment
- You can invest in a market that is falling
- CFDs/futures contacts can be used to day trade
Cons
- These assets are highly risky – add leverage and you can lose a lot of money quickly
- You don't own underlying assets – you own futures contracts and are speculating on the price of copper
Compare CFD brokers to trade copper futures
Disclaimer: General information only. All forms of investments (and in particular, trading CFDs, commodities and forex) carry significant risk, including the risk of losing more than the invested amounts, market volatility and liquidity risks. Past performance is no guarantee of future results. Such activities are not suitable for most investors.
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Why invest in copper stocks?
Copper has an expansive range of industrial and consumer applications – from factories and transmission lines to homes and electronics. And the recent push for electric vehicles (EVs) is likely to increase the demand for this essential metal.
Electric vehicles have 5 times more copper than traditional cars.
And this new driving technology will also require large amounts of copper to support its electric charging infrastructure. Copper’s strong ties to many sectors of the economy likely mean that the demand isn’t going anywhere.
Not only is demand expected to grow due to EVs, it also plays an important role in solar and wind energy systems. So regardless of what green energy initiative is implemented, it is likely that copper stocks will benefit.
What is copper used for?
Copper is a reddish-orange metal that is corrosion-resistant and an excellent conductor of heat and electricity. In its natural state, copper is soft, solid and can be moulded into different shapes and thicknesses.
It is naturally found in ore deposits that are mined or leached. Mining crushes and grinds the ore into powder, where the unwanted materials and other impurities are removed. Leaching uses sulphuric acid to remove the copper from the other ore minerals.
Copper has a plethora of uses across 5 main markets:
- Construction. Wiring, heating, refrigeration and plumbing all use copper materials.
- Electrical and electronics. Utilities and electronics need copper wiring and parts.
- Consumer products. Cookware and household appliances use their fair share of this raw material.
- Transportation. Vehicles, including aeroplanes, cars and trucks, are manufactured with copper.
- Industrial equipment. Machinery consumes millions of pounds of copper every year.
Copper stocks generally refer to companies that explore, develop, produce and sell copper all over the world.
Risks of investing in copper stocks
While copper is one of the most abundant metals on Earth, only a small portion is economically viable to extract at today’s prices using current technologies. So mining companies are vulnerable to copper price fluctuations, which are easily impacted by geopolitics.
For example, global copper prices fell to their 2-year low in 2019. It was collateral damage amid the escalating trade war between the US and China – a country that consumes over 50% of the world’s metal. So even though in 2023 there are a number of tailwinds for the sector, it can easily change.
An additional risk is that there are other practical substitutes for copper.
In some instances, manufacturers can use aluminium instead of copper. These include automobile radiators and optical fibre in telecommunications equipment. Plastics can also be used for pipes and plumbing fixtures instead of copper. As such, it could see a lower demand for copper, meaning the price of the commodity could fall.
Important: The standard brokerage fee displayed is the trade cost for new customers to purchase $1,000 of either Australian or US shares. Where a platform charges different fees for both US and Australian shares we show the lower of the two. Where both CHESS sponsored and custodian shares are offered, we display the cheapest option.
Bottom line
Copper is involved in a lot of economic sectors. While copper's consumer and industrial applications keep it in demand, you’ll need to keep an eye on global trade wars.
Consider a few different trading platforms that offer international brokerage accounts to add copper to your investment portfolio.
Frequently asked questions
Important information: Powered by Finder.com.au. This information is general in nature and is no substitute for professional advice. It does not take into account your personal situation. This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for most investors. You do not own or have any interest in the underlying asset. Capital is at risk, including the risk of losing more than the amount originally put in, market volatility and liquidity risks. Past performance is no guarantee of future results. Tax on profits may apply. Consider the Product Disclosure Statement and Target Market Determination for the product on the provider's website. Consider your own circumstances, including whether you can afford to take the high risk of losing your money and possess the relevant experience and knowledge. We recommend that you obtain independent advice from a suitably licensed financial advisor before making any trades.
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