3 ASX copper shares that have surged 100% to 400% in a year

Looking ahead, the market experts are seeing red. The red metal, that is.

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Key points

  • ASX copper shares Xanadu Mines, Encounter Resources, and Hot Chili have risen by between 100% and 400% over the past 12 months 
  • All three companies are mineral explorers specialising in copper and other metals 
  • Global demand for copper is expected to rise significantly as part of the global decarbonisation trend 

ASX copper shares are gaining traction among investors, who are realising that the red metal is going to play a huge role in global decarbonisation.

The International Energy Agency estimates the world will need 700 million tonnes of copper over the next 20 years to achieve the Paris Agreement climate goals.

Copper is a brilliant electricity conductor. Its traditional industrial uses include common electronic appliances, car radiators, telephones, and heating systems.

Its future uses include electric vehicles, wind turbines, and solar energy systems.

Robert Friedland, the founder of global miner Ivanhoe Mines, reckons copper prices could rise tenfold and foresees a copper "train wreck" amid stalling supply and skyrocketing demand.

In a recent Market Matters Q&A, Shaw and Partners portfolio manager James Gerrish said: "We think copper has a better outlook than iron ore."

Wilsons equity strategist Rob Crookston says the "long-term trend towards copper is clear".

Crookston says EVs require about 3x more copper than conventional cars, and solar and offshore wind projects require about 3x to 7x more copper per megawatt of installed capacity than fossil fuels.

Three ASX copper shares riding this wave of optimism

This trio of ASX mineral explorers is hoping to take full advantage of rising copper demand.

Over the past 12 months, they have been among the best performers of the ASX copper shares.

Xanadu Mines Ltd (ASX: XAM) is a mineral explorer with assets in Mongolia. The Xanadu Mines share price is up 375% over the past 12 months. It is currently trading for 9.5 cents.

Encounter Resources Ltd (ASX: ENR) is an explorer with projects in Western Australia. The Encounter Resources share price is up 262.5% over the past 12 months. It is currently 44 cents.

Hot Chili Ltd (ASX: HCH) is developing several copper assets in Chile. The Hot Chili share price is up 113% over the past 12 months. It is currently $1.50.

The big ASX miners are focusing on copper, too

The 30-year-old Escondida mine in Chile is the world's largest producer of copper concentrates and cathodes.

It produces about 1.2 million tonnes of copper a year, which is 5.5% of global production.

It is owned by BHP Group Ltd (ASX: BHP) (57.5%), Rio Tinto Ltd (ASX: RIO) (30%), and the Japanese consortium, JECO Corporation (12.5%).

BHP recently announced it was using artificial intelligence (AI) to improve copper extraction. This is important because there are few opportunities to build new economical mines.

BHP also operates copper mines in Australia, the United States, Peru, and elsewhere in Chile. In May 2023, it completed a $9.6 billion takeover of OZ Minerals Limited.

Oz Minerals had been the largest pure-play copper miner on the ASX.

BHP says global copper production needs to double over the next 30 years relative to the past 30.

Rio Tinto began life as a copper mine in Spain in 1873. As we reported recently, it's going back to the future and expanding its copper mining segment as well.

Rio Tinto's newly-expanded Oyu Tolgoi copper mine in Mongolia began production in March.

The company owns 66% of the mine.

Rio Tinto says Oyu Tolgoi is on track to be the fourth-largest copper mine in the world.

Barton described the energy transition as "a further opportunity for Rio Tinto".

Copper prices

Copper is one of the few commodities likely to rise in value over the next five years.

According to the Federal Government's official forecasts for commodity prices, the copper price will rise from US$8,406 per tonne in FY23 to US$9,954 per tonne by FY28.

It's currently trading at US$8,429 per tonne, up 12.4% from about US$7,500 this time last year.

The copper price hit a record high in March 2022 went it went above US$10,000 per tonne.

Motley Fool contributor Bronwyn Allen has positions in BHP Group. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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