This ASX 200 copper share is a buy – UBS

There are a number of appealing S&P/ASX 200 Index (ASX: XJO) copper shares that can give investors exposure to the compelling commodity needed for electrification, decarbonisation, and various other uses.

Names like BHP Group Ltd (ASX: BHP), Rio Tinto Ltd (ASX: RIO), and Sandfire Resources Ltd (ASX: SFR) all come to mind.

But, there's another ASX 200 copper share that investors should be aware of, which I'm about to dive into: Capstone Copper Corp (ASX: CSC).

UBS is the broker that likes Capstone Copper. The miner is headquartered and listed in Canada, but also has a presence on the ASX. It has a portfolio of five long-life copper assets across the Americas in Chile, the US, and Mexico. It has plans to grow production to 400kt per year as output grows from Mantoverde, and Santo Domingo comes online at the end of the decade.

Will Capstone Copper reach 400kt of production?

UBS believes that the ASX 200 copper share will reach 400kt per year of production, though it's "happy to model" a slightly more conservative ramp-up to around 370kt by 2030. However, the broker listed a number of growth projects that could help it reach 400kt per year of production:

There remains a number of further growth projects to get it to 400ktpa and beyond including: Mantoverde Cobalt, Mantos Blancos Phase II, Mantoverde Phase II, Santo Domingo oxides & cobalt, Sierra Norte integration, Mantoverde Phase II and Pinto Valley district consolidation (Copper cities).

In 2025, UBS is predicting the business to reach 221kt of production, up 20% year over year.

Why is this ASX 200 copper share appealing?

UBS says it continues to like both the short-term and long-term outlook for copper, with the recent supply challenges from some miners "only serving to exacerbate the more structural issues in front of the industry."

With a projection that its production is going to grow at a compound annual growth rate (CAGR) of more than 10% per year, the business looks "well placed to capitalise on these positive fundamentals as the lesser appreciated copper name on the ASX".

UBS expects 2026 to be the year the market "experiences real tightness on increased impediments to supply, putting the market into deficit and driving sustainable price upside."

Higher copper prices could be a significant boost for the business, as that could add to profitability. More revenue for the same level of production largely adds to the bottom line.

Price target on Capstone Copper shares

UBS currently has a price target of $16 on Capstone Copper shares. That suggests the ASX 200 copper share could rise by 10% over the next 12 months. Further profit growth in the subsequent years could help send the share price higher.

The post This ASX 200 copper share is a buy – UBS appeared first on The Motley Fool Australia.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. 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 recommended BHP Group. 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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