Peter Lukacs — 5 copper stocks: which is best?
Copper Series. A 17-minute head-to-head of the five majors he has covered — Freeport-McMoRan, BHP, Rio Tinto, Glencore and Vale: the copper supply thesis, stock performance since 2020, copper share of each business, 2026 FCF yields, seven-year profitability, debt and credit ratings, then a quality-first ranking — with the verdict that none is cheap and he is waiting for a crash.
One-line take: great story, priced in — rank on quality, buy on a crash. The copper thesis is intact: electrification, data centres and decarbonisation drive demand while discoveries have collapsed (six majors adding ~9 Mt in 2020–25), ~500 Mt sits stuck in feasibility, and supply is concentrated in Latin America — a shortfall that could reach ~10 Mt a year next decade. But "none of these looks cheap": BHP and Rio trade at a premium, Glencore and Freeport are fairly priced, Vale is cheapest. Having shifted from valuation-first to quality-first, he ranks BHP #1 (tier-one assets, single-A credit, 54% copper) and Rio #2 (aluminium diversification), likes Glencore's trading arm in a more fragmented, volatile world, sees Vale as cheapest but iron-ore-bound with dam liabilities, and Freeport as the pure play with Grasberg risk and little valuation room. "I want them to basically crash and then I can pick my favorites."
1. Stocks & names mentioned
| Ticker | Name | Research | View | What he said | At |
|---|
| BHP | BHP Group | QT · SA · STK · FA | Neutral | "BHP is my number one" on quality — tier-one assets, strong seven-year profitability, single-A credit, 54% copper EBITDA, dividend focus. But "the only drawback… why I'm not a buyer today is the valuation. It's just damn too expensive"; waiting for a pullback or recession to "load the truck." | 10:36 |
| RIO | Rio Tinto | QT · SA · STK · FA | Neutral | Number two, "similar story to BHP": high-quality diversified miner, excellent balance sheet and credit, ~36% copper plus 20-something % aluminium (a partial copper substitute), dividends not buybacks. "My weakness on the story is really their valuation" — trades at a premium. | 11:44 |
| GLEN | Glencore | SA · STK | Neutral | "An especially interesting story": copper growth plus a marketing/trading arm that earns more in war-driven commodity volatility, which he expects in a more fragmented world. Gross debt ~$45bn looks alarming but net debt is ~$10bn; BBB-range credit, buybacks, likes the coal; Australian listing this October should help liquidity and multiples. Fairly priced; he owned it before (bought ~10–11, sold ~13–14). | 12:03 |
| VALE | Vale | QT · SA · STK · FA | Neutral | "Best valuation" — the cheapest of the five, with buybacks — but only ~23% copper and ~80% iron ore, which he sees stuck around $100 on China's property mess; far from Asian customers; Samarco and Brumadinho liabilities pressure FCF. Copper output projected to double, yet "still an iron ore dominated story… going to lag a bit." | 13:34 |
| FCX | Freeport-McMoRan | QT · SA · STK · FA | Neutral | The purest copper play and best performer since 2020, strong balance sheet, dividend focus — but limited diversification, Grasberg mudslide execution/concentration risk, lowest credit (BBB−), and at $5/$6/$7 copper with $6 base "doesn't look as cheap… I don't see that much of a room for valuation." | 14:59 |
Not tabled: Samarco (Vale–BHP joint venture, cited for Vale's dam liabilities) and the Grasberg mine (Freeport) — folded into the VALE / FCX rows; his earlier "macro framework" video is referenced but not a security.
2. Talking points
00:31 Performance since 2020
- US-listed lines indexed to January 2020, ex-dividends: Freeport far ahead as the copper pure play, Glencore a decent second, Rio and BHP hand in hand, Vale a distant fifth.
- Glencore spikes when wars break out (Ukraine 2022, Iran 2026) — commodities rally, but its trading business earns more on geopolitical volatility.
02:01 Why Vale lagged — and who buys back stock
- Vale has the smallest copper share (~23%); weak iron ore and strong copper explain the gap since 2024.
- Only Glencore and Vale do meaningful buybacks; Rio, BHP and Freeport pay dividends — and "buybacks not necessarily push your stock price higher."
02:22 The copper thesis
- Decarbonisation, electrification, digitalisation and data centres accelerate demand; the supply shortfall could reach ~10 Mt a year next decade.
- Unlike wheat, where high prices cure themselves next season, copper must be found, developed and permitted — it "takes much longer."
03:12 Discoveries have collapsed
- Exploration spending has recovered, yet 2020–25 produced just six major discoveries (~9 Mt), far below prior decades; ~500 Mt of found copper is still in feasibility.
- Exploration has shifted from grassroots to existing mines.
04:12 Geographic concentration and permitting
- Latin America holds ~55% of major discovered copper; recent finds are concentrated in a few regions, adding geopolitical and permitting risk — "we've seen in the past how shaky that can be."
04:39 Copper exposure by company
- Freeport essentially pure copper; BHP ~54%; Rio ~36% plus 20-something % aluminium, rest iron ore; Glencore ~29–30% of EBITDA plus trading and coal (he likes the coal); Vale ~23% copper / ~80% iron ore, late to the game but with meaningful growth.
05:46 Valuation: none is cheap
- The copper story has been out for years and "much of the… optimism is priced in."
- On 2026 expected FCF yield and discounted future FCF: BHP and Rio at a premium, Glencore and Freeport fairly priced, Vale cheapest. Heavier copper capex since 2024 depresses FCF for all.
07:02 Profitability needs context
- Seven-year average ROI/ROE flatters the iron-ore producers (BHP, Vale, Rio) because 2021–22 were exceptional iron-ore years — "the past is not indicative necessarily of the future."
- Asia is the biggest buyer; Australia-based BHP and Rio ship bulky iron ore a short distance, Vale ships from South America.
08:56 Debt: a rule of thumb
- Leverage rose with copper growth capex since 2024, but most sit inside his "intelligent investor"-style rule: ≤50% debt-to-equity and ≥5× interest coverage.
- Glencore looks out of proportion (~$45bn gross debt) because trading needs financing; net debt is ~$10bn, hence a decent rating.
09:44 Credit ratings
- All five investment grade: BHP and Rio in single-A territory; Glencore and Vale BBB+/BBB; Freeport lowest at BBB−, "right above the speculative grade cutoff."
10:36 #1 BHP — quality over valuation
- "I used to be more valuation focused but I realized that I have to just focus much more on quality."
- Tier-one assets, strong profitability, top credit, 54% copper, dividend focus (possibly an Australian tax feature). "Damn too expensive" — miners fell ~5% the day before; in a recession "I could maybe load the truck."
11:24 #2 Rio Tinto
- Excellent balance sheet and credit, aluminium diversification, growing copper; dividends, no buybacks. Weakness: valuation.
12:03 Glencore — built for a fragmented world
- Copper growth plus marketing that benefits from war-driven volatility; ties to his macro-framework view of "a more fragmented world going forward."
- Net debt much lower than reported; solid investment-grade credit; buybacks; London and Johannesburg listings with an Australian listing due in October. He previously owned it and rotated into oil.
13:34 Vale — cheapest, but iron-ore bound
- Best valuation after lagging; Samarco / Brumadinho liabilities and dam decharacterisation pressure FCF.
- Copper production projected to double, but iron ore stuck around $100 with China's property mess makes it a cash cow — "going to lag a bit but they are the cheapest nonetheless."
14:59 Freeport — the pure play
- Purest copper exposure, strong balance sheet, dividends; but limited diversification and Grasberg mudslide execution and concentration risk.
- At $5/$6/$7 copper with $6 as base "doesn't look as cheap"; at $7 cheaper, but not enough.
16:09 Verdict: wait for the crash
- "Story is great. Fundamentals are there, but valuation is something that I'm waiting for to change. I want them to basically crash and then I can pick my favorites."
3. In plain English
BHP — BHP Group Neutral
BHP is an Australian mining giant; about half its profit now comes from copper, the rest mainly from iron ore used to make steel. Lukacs ranks it the best of the five big copper names on quality: its mines are among the world's best and cheapest to run, it has been very profitable for years, and credit agencies rate its debt in the safe "single-A" band. It returns cash mostly through dividends rather than share buybacks.
He isn't buying because the price already reflects all that — "damn too expensive." His plan is to wait for a big market drop or recession, when mining stocks usually fall hard, and then buy heavily ("load the truck").
RIO — Rio Tinto Neutral
Rio Tinto is another Anglo-Australian miner — mostly iron ore, but with about a third of its business in copper and a fifth in aluminium, a lighter metal that can partly replace copper in some uses. That mix makes it less dependent on any one metal, and its balance sheet and credit rating are excellent. He ranks it second behind BHP, with the same problem: investors already pay a premium price for that quality, so he would rather wait for a sell-off.
GLEN — Glencore Neutral
Glencore both mines (copper, coal and more) and runs one of the world's biggest commodity-trading desks. Traders make more money when prices swing wildly, which is why the stock jumped when the Ukraine and Iran wars broke out; Lukacs expects a more divided, volatile world, which suits that business.
Its debt looks huge (about $45bn) because trading needs lots of short-term borrowing, but it also holds large sellable inventories and cash, so debt minus those assets is only about $10bn. He calls it fairly priced, likes that it buys back shares, and notes a new Australian stock listing in October could attract more buyers. He has owned it before.
VALE — Vale Neutral
Vale is a Brazilian miner that is still mostly iron ore, with copper only about a fifth of the business. It is the cheapest of the five, but for reasons: he expects iron-ore prices to stay flat while China's property slump drags on, it ships its heavy ore a long way to Asian buyers, and it still owes large sums for two deadly tailings-dam collapses (Samarco and Brumadinho). Its copper output is set to double, which helps, but he expects the stock to keep lagging for now.
FCX — Freeport-McMoRan Neutral
Freeport is the closest thing to a pure copper company, which is why its shares did best as copper rose. That same focus is the risk: little to fall back on if copper weakens, heavy reliance on its giant Grasberg mine in Indonesia (hit by a mudslide), and the lowest credit rating of the group — still investment grade, but just one notch above "junk." Modelling copper at $5, $6 and $7 a pound, he finds it fairly priced with little room for error, so it's not a buy today.
For personal study — not investment advice. Source material © Peter Lukacs Research.