Key Takeaways
- Copper carries electricity, and AI data centers, power grids, and electric vehicles all need more of it, making the metal a critical input for the next phase of electrification.
- Freeport McMoRan (FCX) and Southern Copper (SCCO) sit at opposite ends of the cost curve, and judging them requires looking across a full commodity cycle, not a single quarter.
- TIKR.com valuation models show both stocks with upside over the next several years, though Southern Copper’s projected annualized return is more than double Freeport’s.
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Oil once ran the world. Now copper is starting to look like its replacement, at least for the part of the economy being rebuilt around artificial intelligence.
Copper conducts electricity better than almost any other widely mined metal. That makes it essential for power grids, data centers and electric vehicles.
As AI adoption pushes electricity demand higher and more of the world electrifies, copper is becoming a resource companies and governments cannot do without.
“Electricity means copper,” Freeport McMoRan Chairman Richard Adkerson said on the company’s Q2 2026 earnings call. “As the world continues to electrify, it will need what we produce more than ever.”
Two major producers sit at the center of that story. Freeport McMoRan and Southern Copper mine the metal, but in very different ways. Understanding those differences matters for anyone thinking about copper as a long-term investment.
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Two miners, two different playbooks
Freeport McMoRan is one of the world’s largest copper producers, with mines across the Americas and a massive operation in Indonesia called Grasberg.
The company is ramping that mine back up after production setbacks, and it is also investing in new leaching technology to squeeze more copper out of existing sites in the United States.
Southern Copper is smaller in scale but runs one of the industry’s lowest-cost operations. Its mines in Peru and Mexico sit on some of the largest untapped copper reserves anywhere, and the company has a long runway of expansion projects, including the Tia Maria project in Peru and El Pilar in Mexico.
Both companies are cyclical. Their profits rise and fall with copper prices on exchanges like the London Metal Exchange and COMEX. A single strong or weak quarter tells you very little.
The better approach is to judge these companies across a full price cycle, paying close attention to how cheaply they can pull copper out of the ground and how many years of reserves they have left.
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What the cash flow says for FCX and SCCO stock
Freeport’s free cash flow has been choppy.
According to TIKR.com data, it generated $5.6 billion in 2021, then dropped to $1.67 billion in 2022 and just $455 million in 2023, before recovering to $2.35 billion in 2024 and $1.16 billion in 2025.
Southern Copper’s cash generation has been far steadier.
TIKR.com figures show free cash flow of $3.4 billion in 2021, $1.85 billion in 2022, $2.56 billion in 2023, $3.4 billion in 2024, and $3.42 billion in 2025.
That consistency shows up in operating results too.
Southern Copper posted record adjusted EBITDA of $2.86 billion in the second quarter of 2026, up 60% year over year, with a 67% margin, according to the company’s Q2 2026 earnings call. Net income hit a record $1.67 billion, up 72%.
Freeport, meanwhile, said consolidated net income rose 65% in the first half of 2026 compared with the first half of 2025, driven partly by its U.S. mining operations, which contributed 2.4 times more operating income than a year earlier, according to the company’s Q2 2026 earnings call.
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Valuation and what analysts expect
Southern Copper trades at a premium. Its shares carry a current NTM price-to-earnings ratio of 27.96x, well above its historical mean of 21.80x, according to TIKR.com. Freeport trades closer to its own average, at 21.11x versus a mean of 20.16x.
TIKR.com’s valuation models, based on mid case assumptions through the end of 2030, put Freeport’s target price at $86.16 versus a current price of $71.22, implying a 21% total return, or 4.5% annualized.
Southern Copper’s target is $319.32 against a current price of $198.73, implying a 60.7% total return, or 11.5% annualized.
Southern Copper’s edge comes largely from its lower operating cash cost. The company reported an operating cash cost of $2.29 per pound before by-product credits in Q2 2026, and just $0.05 per pound once by-product credits from molybdenum, silver, and zinc are included, according to its earnings call.
Freeport’s average unit net cash cost sits higher, around $1.90 per pound for 2026, though the company said each ten-cent move in copper prices swings annual EBITDA by roughly $390 million.
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The bigger bet on electrification
Both companies are investing heavily to grow supply.
Southern Copper’s capital program for this decade tops $20.5 billion, with plans to push copper production above one million tons by 2029 and 1.6 million tons by 2033 or 2034.
Freeport is advancing a potential $4.5 billion expansion at its Bagdad mine in Arizona and continuing the ramp-up at Grasberg, which it expects to reach roughly 65% of full capacity in the second half of 2026.
Copper is not oil. It does not power engines directly. But as AI infrastructure and electrification spread, the metal is becoming just as central to the global economy.
For investors willing to stomach commodity price swings, Freeport McMoRan and Southern Copper offer two different ways to bet on that shift, one built for scale and one built for cost efficiency.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
