Copper pipes are displayed in a home rebuilding store in New York City. — AFP
FREEPORT-MCMORAN could see a US$1.6bil boost to annual profit if President Donald Trump’s copper tariff materialises, a benefit driven by the firm’s role as the largest US producer with more expansion options than rivals.
Responsible for 60% of US copper output, Phoenix-based Freeport has since the 19th Century cultivated US mine projects that have decades of growth potential without the need for fresh permitting.
Other companies have struggled due to the stubborn reality of American mining: It takes years to build a US mine.
Trump announced last Wednesday a 50% tariff on imports of the metal used in construction, electronics, and nearly every part of the economy.
It would be the first time Washington has imposed a copper tariff if enacted by Trump’s Aug 1 start date.
The initial announcement last Tuesday, which pushed Freeport stock up 5%, sparked questions about where Trump hopes to procure the metal, given longstanding hurdles to building mines and smelters, and few options outside of Freeport’s seven US copper mines.
“The longer-term aim of the Trump administration may be for the United States to be fully self-sufficient in copper, but mines take too long to develop for this to be achieved in less than a 10-year time horizon,” said Jefferies analyst Chris LaFemina.
The US imports roughly half of its copper needs, mostly from Chile, Canada and Peru.
China is the world’s largest smelter and consumer of copper, with global demand poised to jump at least 60% by 2050, according to the International Energy Agency.
Jefferies singled out Freeport as the company expected to benefit most from Trump’s tariffs.
Controlling four of the five largest US copper mines, Freeport sells all of its US product inside the country, more than any other company.
The copper is sold at US Comex copper prices, which have jumped since Trump first suggested potential tariffs in February, boosting the company’s bottom line.
Freeport in April estimated it would reap a profit windfall of at least US$800mil annually from higher prices should a copper tariff take effect.
The April estimate was based on US copper prices of US$4.84 per pound, a premium of roughly 60 US cents per pound to benchmark LME copper prices.
The premium is now roughly double, equating to about US$1.6bil in additional annual earnings before interest, taxes, depreciation and amortisation (Ebitda) for Freeport, the company told Reuters.
It earned US$10bil in Ebitda in 2024.
Freeport declined to comment on the full tariff plan until it can review details.
US refined copper imports have jumped more than six-fold since 2014, even as production slipped 20%, according to US Geological Survey data.
The country has nearly 30 years’ worth of supply within its borders.
As mines age, they must expand or be replaced.
Yet, mines are deeply unpopular across much of the United States, resulting in drawn-out regulatory decisions.
It takes an average of nearly 29 years to build a US mine, the second-longest time globally behind Zambia, a 2024 study from consultancy S&P Global showed.
Unlike factories for furniture or other consumer goods – which can be built in a year or two – mines require geological exploration, a permitting process that can stretch longer than a decade, and sometimes face opposition from Indigenous or conservation groups.
Construction can take more than three years.
Proposed US copper projects from BHP, Rio Tinto, Northern Dynasty Minerals, Antofagasta and others have been delayed for more than a decade.
The United States only has three copper smelters to process metal for use in making wires and pipes, although one has been idled since 2019.
In 1995, the United States had seven copper smelters.
Freeport CEO Kathleen Quirk told Reuters in March that any levies could affect the global economy.
“We are kind of the poster child for American copper production,” Quirk said.
Freeport has plans to leach copper from old waste rock at its US mines previously thought worthless.
By 2027, leaching could boost Freeport’s US output by 800 million pounds of copper annually.
Several of the company’s US mines, including Bagdad and Lone Star in Arizona, have room to grow.
Freeport said in March it might expand its US smelter.
In Utah, Rio Tinto operates the Kennecott copper mine – the world’s deepest open-pit facility – and is undertaking a major expansion.
Rio Tinto is also trying to develop its Resolution Copper project in Arizona, but faces indigenous opposition.
The company said it has a “strong desire to invest more in American copper, and we see significant opportunities to grow our business in the United States”.
KGHM, Lundin and Grupo Mexico are among the smaller US copper producers.
One supply lever for Trump could be to ban exports of copper scrap. Copper, like all critical minerals, can be recycled.
The US exports more than 500,000 tonnes of copper scrap annually, more than the largest US copper mine’s annual production. — Reuters
Ernest Scheyder writes for Reuters. The views expressed here are the writer’s own.
