Freeport-McMoRan Inc. (FCX) operates in the metal mining sector, which is expected to boom in the coming decades. The company holds 5% of the global market share in the copper mining industry and owns large assets. Freeport is operating in North America, South America and Indonesia. In 2020, 80% of the company's revenue comes from selling copper, 12% from selling gold and 6% from selling molybdenum.

Freeport is the fourth largest copper producer in the world with a 5% share of the global market. Overall, copper demand increases with global economic growth as 28% copper is used in construction, another 28% in electrical appliances, 21% in consumer products, 12% in transportation. loads and 11% in industrial machinery. However, the copper industry can greatly benefit from technological advancements. For example, electric vehicles need about four times more copper than traditional vehicles with internal combustion engines. An average electric car needs 83 kg of copper while a traditional car only needs 20 kg. The copper used inside the lithium-ion battery requires 0.5 kg - 0.7 kg of copper per kilowatt-hour. Other vehicle components and wiring, which transmit current from the battery to the vehicle's electrical components, require an average of 40 kg of copper per vehicle. Electric vehicles also need charging station infrastructure, which requires significant amounts of copper. Currently, the US government is preparing a stimulus package worth $ 2 trillion to spend heavily on infrastructure for clean energy development. Renewable energy sources also increase the demand for copper because wind turbines and solar panels require 4-5 times more copper than the electricity demand generated from traditional fossil fuels.

On the basis of the electric vehicle / clean energy revolution, Goldman Sachs predicts copper demand will grow dramatically. According to them, copper demand will increase by 600% by 2030 to 5.4 million tons. They argue that the industry cannot provide the same rate of supply growth, which is why they expect the price of 1 ton copper to rise to $15,000 by 2025. So these developments show that we will see tremendous growth of the copper industry in the coming years.

Freeport greatly benefits from the increase in the price of copper. Management expects to double EBITDA in 2020 in case copper prices average $7716/ton. However, the current price is significantly higher than that expectation as it stands at $9,382/ton. So, considering the $7716/ton price, management projects $8 billion EBITDA for 2021 and $5.5 billion operating cash flow. According to management, each $0.1 increase in the price of copper will bring in an additional $325 million in operating cash flow for the company. At the same time, management expects a significant increase in copper and gold sales in 2021. They expect a 20% increase in copper sales and a 50% increase in gold sales. Meanwhile, management expects a 16% reduction in unit costs as they expect to bring the cost of producing the 1-pound copper down to $1.25.