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FCX vs. BHP: Which Copper Mining Giant Should You Invest in Now?
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Freeport-McMoRan Inc. (FCX - Free Report) and BHP Group Limited (BHP - Free Report) are two heavyweights in the copper mining industry. Both are navigating challenges such as fluctuating copper prices and global economic uncertainties. Given the current uncertainties surrounding the trade tensions and their potential impact on copper prices, analyzing these companies' fundamentals is timely and pertinent.
Copper prices surged to a new record high of $5.24 per pound in late March as buyers stocked up the commodity amid concerns that President Donald Trump could impose tariffs on copper, leading to a disruption in the global supply chain. However, prices nosedived to around $4.1 per pound in early April amid demand worries due to tariffs, which threatened to cause a broader slowdown globally. Prices of the red metal moved up in late April to roughly $4.9 per pound amid a weakening U.S. dollar on heightened concerns about the prospect of a downturn in the U.S. economy. Lately, prices have again retreated to around $4.7 per pound on weak global demand and increased supply. The trade conflict continues to pose risks to copper demand, as the metal is essential in various industries, including electronics and construction.
Let’s dive deep and closely compare the fundamentals of these two copper miners to determine which one is a better investment option now.
The Case for Freeport
Freeport is well-placed with high-quality copper assets and remains focused on strong execution and advancing its organic growth opportunities. At its Cerro Verde operation in Peru, a large-scale concentrator expansion provided incremental annual production of around 600 million pounds of copper and 15 million pounds of molybdenum. It is evaluating a large-scale expansion at El Abra in Chile to define a large sulfide resource that could potentially support a major mill project similar to the large-scale concentrator at Cerro Verde. FCX is also conducting pre-feasibility studies (expected to be completed in 2026) in the Safford/Lone Star operations in Arizona to define a significant sulfide expansion opportunity. It also has expansion opportunities at Bagdad in Arizona to more than double the concentrator capacity of the operation.
Also, PT Freeport Indonesia (PT-FI) substantially completed the construction of the new greenfield smelter in Eastern Java during 2024, with an expected start-up in second-quarter 2025, followed by a full ramp-up by the end of 2025. PT-FI is also developing the Kucing Liar ore body within the Grasberg district with a targeted commencement of production by 2030. Gold production also commenced at the new precious metals refinery in late 2024. Plans are in place to transition PT-FI’s existing energy source from coal to natural gas, which is expected to significantly reduce greenhouse gas emissions at Grasberg.
FCX has a strong liquidity position and generates substantial cash flows, which allow it to finance its growth projects, pay down debt and drive shareholder value. It generated operating cash flows of around $1.1 billion in the first quarter of 2025. It has distributed $5 billion to its shareholders through dividends and share purchases since June 30, 2021. Freeport ended the first quarter with strong liquidity, including $4.4 billion in cash and cash equivalents, $3 billion in availability under the FCX revolving credit facility and $1.5 billion in availability under the PT-FI credit facility.
FCX offers a dividend yield of roughly 0.8% at the current stock price. Its payout ratio is 22% (a ratio below 60% is a good indicator that the dividend will be sustainable), with a five-year annualized dividend growth rate of 21.8%. Backed by strong financial health, the company's dividend is perceived to be safe and reliable.
Despite these positives, weak copper volumes may hurt FCX’s performance. Its copper production declined around 20% year over year to 868 million pounds in the first quarter. Copper sales fell 21% year over year in the quarter, adversely impacted by a major maintenance project in Indonesia. Freeport has provided a tepid consolidated copper volume outlook for 2025, which suggests flat to modestly lower volumes on a year-over-year basis. The lack of growth in copper volumes may affect the company’s performance in 2025. Retreating copper prices are also a concern for FCX. Weaker global manufacturing activities pose risks to copper demand. Copper demand is also likely to remain under pressure at least through the first half under the weight of tariffs.
The Case for BHP
BHP Group continues to strengthen its portfolio to focus on commodities, including copper, that will help it ride on growing global trends such as decarbonization and electrification. It is also making operations more efficient on the back of smart technology adoption across the entire value chain. BHP’s copper output climbed 10% year over year to 1,500 kilotons (kt) for the first nine-month period of fiscal 2025 (ended March 31, 2025). Production at Escondida, the world’s largest copper mine, was up 20% year over year to around 978 kt in the period. BHP expects copper production to be within the range of 1,845-2,045 kt in fiscal 2025, following a 15-year high production of 1,865 kt in fiscal 2024. The guidance indicates 4% growth at the midpoint. At Escondida, the integration of the Full SaL leaching project continues, with the project remaining on track for first production later in fiscal 2025.
In Chile, the company has several key projects, which can grow copper production to average roughly 1.4 million tons per annum (Mtpa) through the 2030s. BHP is investing in its 100% owned Copper South Australia asset, focusing on all three operations. The company has announced smelter and refinery expansion at Olympic Dam, which is expected to take BHP’s copper production in South Australia from 322,000 tons in fiscal 2024 to more than 500,000 tons by early 2030s and 650,000 tons by mid-2030s. BHP and Lundin Mining, earlier this year, completed the acquisition of Filo Corp and formed a joint venture, Vicuña Corp., to hold the Filo del Sol and Josemaria copper projects. This will help advance one of the most significant copper discoveries globally in recent decades.
BHP also has a 45% interest in the Resolution Copper Project in the United States, one of the largest undeveloped copper projects in the world. BHP expects these projects to deliver more than 2 Mtpa of attributable copper production by the mid-2030s.
In fiscal 2024, BHP’s net operating cash flow increased 11% year over year to $20.7 billion as a result of the higher underlying EBITDA. Net operating cash flow was $8.3 billion in the first half of fiscal 2025 (ended Dec. 31, 2024). BHP’s focus on lowering debt is also commendable. Aided by its strong cash flow, the company has reduced its long-term debt level considerably over the past few years. BHP’s net debt was $11.8 billion as of the end of the first half of fiscal 2025, within its target of $5-$15 billion. Its long-term debt-to-capitalization is 26.7% compared with FCX’s 23.4%. BHP also offers a dividend yield of roughly 4% at the current stock price. It has a five-year annualized dividend growth rate of -6.8%.
On the flip side, BHP remains hamstrung by higher costs, including higher labor costs. BHP witnessed an effective inflation rate of around 10% in fiscal 2023 and 4% in fiscal 2024, predominantly due to higher labor costs. The continued tightness in the labor market remains a concern. Along with labor costs, some raw material costs, such as ammonia and natural rubber, went up in the first half of fiscal 2025 due to supply issues. Higher overall cost of mining production is expected to weigh on the company’s bottom line.
Price Performance and Valuation of FCX & BHP
The FCX stock is down 25.8% over the past year, while BHP has lost 16% compared with the Zacks Mining - Non Ferrous industry’s decline of 27.2%.
Image Source: Zacks Investment Research
FCX is currently trading at a forward 12-month earnings multiple of 20.65. This represents a roughly 4.9% premium when stacked up with the industry average of 19.68X.
BHP is currently trading at a forward 12-month earnings multiple of 12.19, below FCX and the industry.
Image Source: Zacks Investment Research
How the Zacks Consensus Estimate Compares for FCX & BHP
The Zacks Consensus Estimate for FCX’s 2025 sales and EPS implies a year-over-year rise of 4.4% and 8.8%, respectively. The EPS estimates for 2025 have been trending lower over the past 60 days.
Image Source: Zacks Investment Research
The consensus estimate for BHP’s fiscal 2025 sales implies a year-over-year decline of 5.6%. The same for EPS suggests a 2.6% year-over-year increase. The EPS estimates for fiscal 2025 have been trending southward over the past 60 days.
Image Source: Zacks Investment Research
(Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
Both Freeport and BHP present compelling investment cases. FCX is poised to gain from progress in expansion activities that will boost production capacity. Robust financial health allows FCX to invest in growth projects and drive shareholder value. Strong cash generation, investment in growth projects and higher operational efficacy, aided by the adoption of technology, bode well for BHP Group amid headwinds from higher costs. FCX's higher earnings growth projections and healthy dividend growth rate suggest that it may offer better investment prospects in the current market environment. In addition, Freeport’s lower leverage suggests lesser financial risks. Investors seeking exposure to the copper mining space might consider FCX to be the more favorable option at this time.
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FCX vs. BHP: Which Copper Mining Giant Should You Invest in Now?
Freeport-McMoRan Inc. (FCX - Free Report) and BHP Group Limited (BHP - Free Report) are two heavyweights in the copper mining industry. Both are navigating challenges such as fluctuating copper prices and global economic uncertainties. Given the current uncertainties surrounding the trade tensions and their potential impact on copper prices, analyzing these companies' fundamentals is timely and pertinent.
Copper prices surged to a new record high of $5.24 per pound in late March as buyers stocked up the commodity amid concerns that President Donald Trump could impose tariffs on copper, leading to a disruption in the global supply chain. However, prices nosedived to around $4.1 per pound in early April amid demand worries due to tariffs, which threatened to cause a broader slowdown globally. Prices of the red metal moved up in late April to roughly $4.9 per pound amid a weakening U.S. dollar on heightened concerns about the prospect of a downturn in the U.S. economy. Lately, prices have again retreated to around $4.7 per pound on weak global demand and increased supply. The trade conflict continues to pose risks to copper demand, as the metal is essential in various industries, including electronics and construction.
Let’s dive deep and closely compare the fundamentals of these two copper miners to determine which one is a better investment option now.
The Case for Freeport
Freeport is well-placed with high-quality copper assets and remains focused on strong execution and advancing its organic growth opportunities. At its Cerro Verde operation in Peru, a large-scale concentrator expansion provided incremental annual production of around 600 million pounds of copper and 15 million pounds of molybdenum. It is evaluating a large-scale expansion at El Abra in Chile to define a large sulfide resource that could potentially support a major mill project similar to the large-scale concentrator at Cerro Verde. FCX is also conducting pre-feasibility studies (expected to be completed in 2026) in the Safford/Lone Star operations in Arizona to define a significant sulfide expansion opportunity. It also has expansion opportunities at Bagdad in Arizona to more than double the concentrator capacity of the operation.
Also, PT Freeport Indonesia (PT-FI) substantially completed the construction of the new greenfield smelter in Eastern Java during 2024, with an expected start-up in second-quarter 2025, followed by a full ramp-up by the end of 2025. PT-FI is also developing the Kucing Liar ore body within the Grasberg district with a targeted commencement of production by 2030. Gold production also commenced at the new precious metals refinery in late 2024. Plans are in place to transition PT-FI’s existing energy source from coal to natural gas, which is expected to significantly reduce greenhouse gas emissions at Grasberg.
FCX has a strong liquidity position and generates substantial cash flows, which allow it to finance its growth projects, pay down debt and drive shareholder value. It generated operating cash flows of around $1.1 billion in the first quarter of 2025. It has distributed $5 billion to its shareholders through dividends and share purchases since June 30, 2021. Freeport ended the first quarter with strong liquidity, including $4.4 billion in cash and cash equivalents, $3 billion in availability under the FCX revolving credit facility and $1.5 billion in availability under the PT-FI credit facility.
FCX offers a dividend yield of roughly 0.8% at the current stock price. Its payout ratio is 22% (a ratio below 60% is a good indicator that the dividend will be sustainable), with a five-year annualized dividend growth rate of 21.8%. Backed by strong financial health, the company's dividend is perceived to be safe and reliable.
Despite these positives, weak copper volumes may hurt FCX’s performance. Its copper production declined around 20% year over year to 868 million pounds in the first quarter. Copper sales fell 21% year over year in the quarter, adversely impacted by a major maintenance project in Indonesia. Freeport has provided a tepid consolidated copper volume outlook for 2025, which suggests flat to modestly lower volumes on a year-over-year basis. The lack of growth in copper volumes may affect the company’s performance in 2025. Retreating copper prices are also a concern for FCX. Weaker global manufacturing activities pose risks to copper demand. Copper demand is also likely to remain under pressure at least through the first half under the weight of tariffs.
The Case for BHP
BHP Group continues to strengthen its portfolio to focus on commodities, including copper, that will help it ride on growing global trends such as decarbonization and electrification. It is also making operations more efficient on the back of smart technology adoption across the entire value chain. BHP’s copper output climbed 10% year over year to 1,500 kilotons (kt) for the first nine-month period of fiscal 2025 (ended March 31, 2025). Production at Escondida, the world’s largest copper mine, was up 20% year over year to around 978 kt in the period. BHP expects copper production to be within the range of 1,845-2,045 kt in fiscal 2025, following a 15-year high production of 1,865 kt in fiscal 2024. The guidance indicates 4% growth at the midpoint. At Escondida, the integration of the Full SaL leaching project continues, with the project remaining on track for first production later in fiscal 2025.
In Chile, the company has several key projects, which can grow copper production to average roughly 1.4 million tons per annum (Mtpa) through the 2030s. BHP is investing in its 100% owned Copper South Australia asset, focusing on all three operations. The company has announced smelter and refinery expansion at Olympic Dam, which is expected to take BHP’s copper production in South Australia from 322,000 tons in fiscal 2024 to more than 500,000 tons by early 2030s and 650,000 tons by mid-2030s. BHP and Lundin Mining, earlier this year, completed the acquisition of Filo Corp and formed a joint venture, Vicuña Corp., to hold the Filo del Sol and Josemaria copper projects. This will help advance one of the most significant copper discoveries globally in recent decades.
BHP also has a 45% interest in the Resolution Copper Project in the United States, one of the largest undeveloped copper projects in the world. BHP expects these projects to deliver more than 2 Mtpa of attributable copper production by the mid-2030s.
In fiscal 2024, BHP’s net operating cash flow increased 11% year over year to $20.7 billion as a result of the higher underlying EBITDA. Net operating cash flow was $8.3 billion in the first half of fiscal 2025 (ended Dec. 31, 2024). BHP’s focus on lowering debt is also commendable. Aided by its strong cash flow, the company has reduced its long-term debt level considerably over the past few years. BHP’s net debt was $11.8 billion as of the end of the first half of fiscal 2025, within its target of $5-$15 billion. Its long-term debt-to-capitalization is 26.7% compared with FCX’s 23.4%. BHP also offers a dividend yield of roughly 4% at the current stock price. It has a five-year annualized dividend growth rate of -6.8%.
On the flip side, BHP remains hamstrung by higher costs, including higher labor costs. BHP witnessed an effective inflation rate of around 10% in fiscal 2023 and 4% in fiscal 2024, predominantly due to higher labor costs. The continued tightness in the labor market remains a concern. Along with labor costs, some raw material costs, such as ammonia and natural rubber, went up in the first half of fiscal 2025 due to supply issues. Higher overall cost of mining production is expected to weigh on the company’s bottom line.
Price Performance and Valuation of FCX & BHP
The FCX stock is down 25.8% over the past year, while BHP has lost 16% compared with the Zacks Mining - Non Ferrous industry’s decline of 27.2%.
FCX is currently trading at a forward 12-month earnings multiple of 20.65. This represents a roughly 4.9% premium when stacked up with the industry average of 19.68X.
BHP is currently trading at a forward 12-month earnings multiple of 12.19, below FCX and the industry.
How the Zacks Consensus Estimate Compares for FCX & BHP
The Zacks Consensus Estimate for FCX’s 2025 sales and EPS implies a year-over-year rise of 4.4% and 8.8%, respectively. The EPS estimates for 2025 have been trending lower over the past 60 days.
The consensus estimate for BHP’s fiscal 2025 sales implies a year-over-year decline of 5.6%. The same for EPS suggests a 2.6% year-over-year increase. The EPS estimates for fiscal 2025 have been trending southward over the past 60 days.
(Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
FCX or BHP: Which is a Better Pick?
Both FCX and BHP currently have a Zacks Rank #3 (Hold), so picking one stock is not easy. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Both Freeport and BHP present compelling investment cases. FCX is poised to gain from progress in expansion activities that will boost production capacity. Robust financial health allows FCX to invest in growth projects and drive shareholder value. Strong cash generation, investment in growth projects and higher operational efficacy, aided by the adoption of technology, bode well for BHP Group amid headwinds from higher costs. FCX's higher earnings growth projections and healthy dividend growth rate suggest that it may offer better investment prospects in the current market environment. In addition, Freeport’s lower leverage suggests lesser financial risks. Investors seeking exposure to the copper mining space might consider FCX to be the more favorable option at this time.