The Great Copper Investment Thesis
Breaking Commodity Cycles or Repeating Old Traps?
While copper has been used by human civilisation for thousands of years, its importance has never been greater than it is today. This versatile metal forms the backbone of modern infrastructure, coursing through the electrical wiring of our homes, offices and factories, enabling power transmission across vast networks, and serving as a critical component in countless industrial applications from construction to telecommunications. The average home contains approximately 200 kilograms of copper in its wiring, plumbing and appliances, whilst a single electric vehicle requires nearly four times the copper content of a conventional petrol-powered car. From the heat exchangers in air conditioning systems to the circuit boards in our smartphones, copper’s superior electrical and thermal conductivity, combined with its durability and malleability, has made it indispensable to modern life.
However, what truly drives copper’s perceived investment thesis is not merely its current ubiquity, but rather the large surge in demand anticipated over the coming decades. The global transition towards renewable energy and electrification represents a generational shift that positions copper at the centre of the world’s most critical infrastructure projects. Wind turbines, solar panels and battery storage systems are all intensely copper-intensive, requiring several times more of the metal than traditional energy infrastructure. Similarly, the electrification of transport, the expansion of data centres to support artificial intelligence and cloud computing, and the modernisation of electrical grids to accommodate renewable energy sources all point towards an unprecedented increase in copper consumption. Some industry analysts project that global copper demand could increase by 50% or more by 2040, from 28 million metric tonnes in 2025 to 42 million metric tonnes. Whilst this is occurring, some also project that new mine supply will struggle to keep pace with this demand trajectory due to declining ore grades, lengthy development timelines and increasingly stringent environmental regulations. It is this structural supply-demand imbalance, set against the backdrop of the energy transition, that forms the foundation of copper’s current investment case.
So why is copper so important and commonly used? Well there are many reasons for that. Copper possesses a unique combination of properties that makes it nearly irreplaceable across modern industries. With the second-highest electrical and thermal conductivity of any metal (surpassed only by silver), copper excels at transmitting electricity and heat with minimal energy loss. Beyond its conductivity, copper demonstrates exceptional malleability and ductility, allowing it to be drawn into fine wires or shaped into complex forms without breaking. Its natural corrosion resistance ensures longevity even in harsh environments, whilst its antimicrobial properties actively inhibit bacterial growth. Unlike many metals, copper can be easily alloyed with other elements to create materials with enhanced strength, wear resistance, or specific characteristics. These superior properties combine with economic practicality to make copper the metal of choice for countless applications. Whilst silver offers slightly better conductivity, copper costs a fraction of the price, making it economically viable for large-scale infrastructure projects. Copper’s durability and corrosion resistance mean installations can last decades with minimal maintenance, reducing long-term replacement costs. Its recyclability is particularly valuable as copper can be recycled repeatedly without any loss of performance, with approximately one-third of global copper supply coming from recycled sources. The metal’s abundance relative to precious metals, combined with established mining and refining infrastructure, ensures stable supply chains. Furthermore, copper’s ease of fabrication reduces manufacturing costs, as it can be processed using conventional techniques without requiring specialised equipment or extreme conditions.
Approximately three-quarters of all copper production serves the electrical industries, manufacturing wires, telecommunication cables, and electronic components. The remaining quarter goes into alloys such as brass, bronze, and nickel silvers, as well as heat exchangers, plumbing systems, and industrial machinery.
Data Caveat: Apparent inconsistencies in copper industry data may arise because global production figures are derived from estimates, forecasts, and aggregated reporting across multiple agencies, industry groups, and national statistical bodies. There is no single global authority publishing a fully harmonised and independently verified dataset, and reported figures reflect differences in methodology, scope, reporting periods, and subsequent revisions.
Future Demand
The anticipated surge in copper demand stems from multiple complementary forces: stable baseline growth from traditional applications combined with several new demand vectors driven by technological advancement and electrification. Traditional applications (building construction, electrical wiring, industrial machinery, consumer electronics and plumbing) will continue to provide the foundation, with S&P Global projecting core economic demand from construction, electric appliances, conventional vehicles, rail, shipping, aviation and power generation to reach 23 million metric tonnes by 2040, representing 53% of global consumption. However, the extraordinary growth that underpins copper’s investment thesis comes from new demand vectors layered on top of this foundation, most prominently the global energy transition.
Renewable energy infrastructure is dramatically more copper-intensive than traditional fossil fuel power generation, for example, a wind farm requires approximately nine times more copper per megawatt than a gas-fired power plant, whilst solar installations require around five times more. This stark difference arises from the fundamental physics and engineering of renewable systems. Fossil fuel plants are centralised, self-contained facilities where fuel is burned on-site to spin turbines, and as a result, the copper requirements are largely confined to the generator itself and the immediate connection to the grid. Renewable energy, by contrast, is inherently distributed: a wind farm might spread dozens or hundreds of turbines across vast areas, each requiring substantial copper cabling to connect to collection points, which then feed into substations that manage the variable output, with individual offshore wind turbines alone containing up to 24 tonnes of copper each. Solar installations similarly demand extensive networks of wiring to link individual panels into arrays, inverters to convert DC to AC power, and robust connections to handle fluctuating generation. Moreover, because wind and solar generate power intermittently and often in remote locations far from population centres (offshore wind farms, desert solar arrays) they necessitate massive investments in transmission infrastructure and energy storage systems, all of which are copper-intensive. Battery storage facilities, essential for balancing renewable energy’s variability, require significant copper for their internal connections and power management systems. S&P Global projects that energy transition demand, encompassing electric vehicles, battery storage, renewable power capacity, transmission and distribution infrastructure, and electrification in developing countries, will see the largest growth, increasing by more than 7 million metric tonnes to reach 15.7 million metric tonnes by 2040. The electric vehicle revolution alone exemplifies this intensity: an EV requires 2.9 times more copper than a conventional internal combustion engine vehicle, approximately 80 kilograms compared to 23 kilograms.
Beyond the energy transition, additional technological and geopolitical demand vectors are emerging that compound the supply challenge. The computational infrastructure powering artificial intelligence and cloud services is expected to triple by 2040 as total installed capacity reaches 550 GW, more than five times 2022 levels as every data centre, every line of code, every AI model depending on copper conductors linking processors, memory and cooling systems. Rising international tensions and technological advancement in weapons systems could see defence spending double to US$6 trillion by 2040, adding further pressure to copper markets. A potential fifth vector, in the form of humanoid robots, could add another 1.6 million metric tonnes annually if 1 billion units achieve operational status by 2040, equivalent to 6% of current demand. This convergence of traditional baseline growth, energy transition imperatives, technological advancement and geopolitical pressures creates compounding copper demand, potentially reshaping the supply-demand dynamics of the global copper market.
The Supply Landscape
To understand why so many investors are projecting structural mismatch between demand and supply, one needs to look into the supply landscape. Assuming vast increase in demand for copper hold true, then there needs to be a supply increase to match this demand for prices to remain at consistent levels or else we may see rapid growth in the price of the mineral. However, many are sceptical about the ability for supply to keep pace. Understanding why there is a commotion about copper’s supply challenges requires examining the complex journey from ore to finished product. This multi-stage process involves geological, engineering, logistical, and regulatory hurdles that combine to create significant barriers to rapid supply expansion.
Process
Copper production begins with geologists searching for viable deposits underground. Modern ore typically contains less than 1% copper; the metal is chemically locked inside rock, not sitting as pure nuggets. The largest deposits are “porphyry” types, where tiny copper particles are scattered throughout massive rock formations. Mining methods depend on how deep the deposit sits: open-pit operations work for shallow deposits by digging down in giant terraced steps, whilst underground mining reaches deeper deposits through tunnel networks. Both require massive investment in equipment and skilled crews. Once mined, the copper ore is still 99% waste rock at this point. It gets crushed into powder fine as talcum, then goes into large flotation tanks. Special chemicals coat only the copper particles, making them repel water. When air bubbles through the tank, these waterproofed copper bits stick to the bubbles and float to the surface as froth, whilst plain rock sinks to the bottom. This separates out a copper concentrate that’s now 20-30% copper instead of 1%, a huge improvement, but still mixed with lots of other minerals. This concentrated material is what’s worth heating up in the next stage. The copper concentrate now goes into giant furnaces heated above 1,200°C. At these temperatures, the copper partially melts and separates into two layers: heavier “matte copper” (about 60% pure) sinks to the bottom, whilst lighter waste floats on top as slag and gets poured off. This matte copper then goes into another furnace where oxygen is blown through it. The oxygen grabs the remaining iron and sulphur, turning the iron into more slag and releasing the sulphur as gas. What’s left is “blister copper” at 98-99% pure—almost there, but those last impurities would ruin copper’s ability to conduct electricity well. To get the final 1% of purity, the blister copper is shaped into thick plates and hung in tanks of acidic copper solution. Thin pure copper sheets hang between them. When electricity runs through the tank, copper atoms dissolve off the thick plates, travel through the liquid, and stick onto the thin sheets. Over two weeks, these sheets grow to 99.99% pure copper which is pure enough for electrical wiring. Everything else either drops to the tank bottom (including valuable gold and silver that get recovered separately) or stays dissolved in the liquid.
The entire process from discovery to production represents one of the copper industry’s most significant constraints. New copper mines take an average of 17 years from initial discovery to first production with a timeline that includes exploration, resource definition, feasibility studies, permitting, financing, construction, and commissioning. This extended development period means that theoretically, supply responses to secular price signals can lag demand by nearly two decades.
Global Production Considerations
Copper production is highly concentrated geographically. Just six countries account for roughly two-thirds of mining production, creating both efficiency and vulnerability in global supply chains. Chile remains the leader, producing approximately 5.3 million metric tonnes in 2024 which was roughly 23% of global output. State-owned Codelco and multinational firms like BHP operate massive facilities supported by decades of mining expertise and infrastructure. Peru ranks second with 2.6 million metric tonnes (11% of global production). The Democratic Republic of Congo produced 3.3 million metric tonnes in 2024 and Chinese investment has driven rapid expansion through joint ventures and wholly-owned operations. China produced 1.8 million metric tonnes from domestic mines in 2024, more significantly, China dominates refining and smelting, accounting for approximately 40-50% of global smelting capacity and producing 12 million metric tonnes of refined copper (44-57% of global refined production). China imports massive amounts of copper concentrate, particularly from Chile, Peru, and the DRC, giving it outsized influence over global copper markets. United States produced 1.1 million metric tonnes in 2024, with major operations in Arizona, Utah, New Mexico, Nevada, and Montana. American production has remained relatively stable, though the country designated copper as a critical mineral in November 2025, recognising its strategic importance. Other significant producers include Indonesia, Australia, Russia, Kazakhstan, and Mexico. This geographical concentration creates several systemic risks. Supply chain vulnerability to regional disruptions, whether it be from natural disasters, political instability, labour disputes, or regulatory changes, can rapidly tighten global markets. China’s dominance in refining creates particular dependencies, as 66% of copper concentrate imports flow to Chinese smelters. Trade barriers, tariffs, or policy shifts in any major producing nation can cascade through global supply chains.
The Bull Case
The bull case for copper rests on the argument that this supply shortage differs fundamentally from historical commodity booms and busts. Multiple converging factors suggest supply will remain constrained for decades, creating a prolonged period of structural deficits.
Unlike typical cyclical industrial demand, the current copper consumption surge stems from policy commitments to decarbonisation and technological transformation that governments worldwide have set in law and international agreements. Countries have committed to net-zero emissions targets, with intermediate milestones that require massive deployment of copper-intensive technologies. In other words, this energy transition is not a choice where companies can easily decommit or markets can counteract, rather it is mandated by layers of laws and government commitments. This creates more security in ensuring long term demand growth for copper and dampening the chances of sudden and significant trajectory changes in demand. BloombergNEF forecasts that energy-transition demand for copper will triple by 2045, driven by policy-backed deployment of electric vehicles, renewable energy, and grid infrastructure. The International Energy Agency estimates global electricity demand will grow nearly 50% by 2040 compared to 2025 levels, with more than 90% of new power generation capacity in 2025 coming from solar and wind which are both highly copper-intensive. Furthermore, this demand isn’t subject to normal price elasticity, although it is certainly still a large factor. Governments have allocated trillions in subsidies and mandates like the European Green Deal, and China’s electrification push all provide a strong backstop of demand regardless of copper prices rising substantially.
Perhaps the most compelling argument for prolonged shortage is the fundamental time asymmetry between demand growth and supply response. As previously mentioned, new copper mines require an average of 17 years from discovery to production. The extended timeline for bringing a copper mine to operation reflects several complex, sequential hurdles. First, exploration and resource definition can take 5-7 years, as companies must conduct extensive drilling and geological surveys to prove a deposit is economically viable. Then, feasibility studies, environmental impact assessments, and securing permits typically consume another 5-8 years, particularly as environmental regulations have tightened and community consultation processes have become more rigorous. Finally, construction itself requires 3-5 years for building infrastructure like processing facilities, tailings dams, and access roads. This timeline has lengthened significantly over recent decades due to stricter environmental standards, declining ore grades (requiring larger-scale operations), mines being located in increasingly remote areas, and more complex stakeholder engagement processes with local communities and indigenous groups. Even if regulatory approval accelerated tomorrow, a slower period of copper mining growth is already “built in” for the next decade. S&P Global’s January 2026 study projects that total global copper production (mined plus recycled) will peak at 33 million metric tonnes in 2030, then decline to 32 million metric tonnes by 2040 without significant new investment. Primary mined supply specifically is expected to peak at 27 million metric tonnes in 2030 before falling to just 22 million metric tonnes by 2040. Meanwhile, demand is projected to reach 42 million metric tonnes by 2040, creating a supply gap of more than 10 million metric tonnes even after accounting for recycled copper more than doubling from 4 million to 10 million metric tonnes. However, you would obviously assume that if the demand is there, this theoretical shortage should not be a real issue, as higher prices would likely incentivise new mine development and encourage substitution in some applications.
Bernstein research suggests supply will only catch up to demand around 2040, assuming aggressive mine development beginning immediately. To meet projected demand, the industry would need to open three “tier-one” mines (each with annual capacity of 300,000 metric tonnes) every year for the next 14 years, which would be a historic expansion requiring over US$500 billion in capital investment. Goldman Sachs research found that regulatory approvals for new copper mines have fallen to their lowest level in 15 years. Environmental scrutiny, water rights, indigenous land claims, community consultations, and biodiversity assessments all extend permitting timelines. Whilst these protections serve important purposes, they create a regulatory barrier that significantly limits supply growth. In some jurisdictions, permitting alone can take 7-10 years even before construction begins. Community opposition, environmental litigation, and political changes can halt projects already years into development. The regulatory environment shows no signs of easing in most developed nations.
On top of these headwinds, the industry faces a geological headwind: average ore grades are declining globally as shallow, high-grade deposits become exhausted. Where mines once processed ore containing 2-3% copper, many now work with less than 0.5% copper content. This means moving and processing vastly more rock to produce the same amount of metal.
Processing lower-grade ore requires more energy, more water, more reagents, and more infrastructure and doing all this whilst producing more waste and tailings. These factors combine to push production costs higher, even as technological improvements deliver incremental efficiencies. Rising energy prices, labour costs, and input costs further compress margins at lower copper prices.
Although recycling (”aboveground mining”) will play an increasing role, even optimistic projections show secondary supply doubling to 10 million metric tonnes by 2040, which is still insufficient to close the supply gap as this is already included in the current S&P Global production projections. Scaling up recycling faces its own constraints as well. Not all copper applications allow easy recovery. Collection infrastructure must be built. Recycled copper still requires energy-intensive reprocessing. Most critically, the stock of copper available for recycling depends on what was installed decades ago, and demand is growing faster than the existing stock. The copper available for recycling today is mostly the copper that was installed in buildings, power grids, and machinery 20 to 40 years ago however, because global copper consumption was significantly lower in the 1980s and 1990s than it is today, the total “stock” reaching its end-of-life is insufficient to meet modern demand levels.
Furthermore, while some alternatives exist for some copper applications, S&P Global notes that most feasible substitutions have already been exhausted, “leaving the metal largely irreplaceable for electrification, data centres, and advanced technology.” Aluminium can replace copper in some uses, but its conductivity is only 60% that of copper, requiring larger, heavier conductors. For many applications, particularly those where space, weight, or performance are critical, copper has no current viable substitute at scale.
The effects of all of this are already showing in current market conditions as LME warehouse stocks fell below 100,000 tonnes in December 2025, signalling acute near-term scarcity. Copper prices reflect this tightness as mounting supply concerns, depleted inventories, and accelerated stockpiling drive prices up. After rising 35% in 2025 (the largest annual gain since 2009), copper hit record levels above US$13,000 per metric tonne in early January 2026.
The Bear Case
While the bull case may seem extremely appealing too many, there exists the bear case, as with all commodity type products, which cautions against extrapolating current constraints indefinitely. History demonstrates that commodity markets possess remarkable adaptive capacity through price signals, innovation, and substitution. Several factors could prevent or substantially mitigate the projected supply crisis, and as a result, suppress the price of copper.
Commodity markets have a well-established pattern: high prices and profits attract massive capital investment, which leads to oversupply and price collapse. Copper has experienced this cycle repeatedly throughout history. The concern that this time will be “different” has proven premature many times before. Currently, copper miners are enjoying near-record prices and strong margins. This should trigger a supply response as companies accelerate development of marginal projects, expand existing operations, and explore aggressively. Whilst the 17-year development timeline constrains immediate response, capital is patient when returns are high. Investors and operators all possess the resources to fund long-duration projects if fundamentals justify the investment. The current high-price environment may already be laying the foundation for future oversupply, just as it has in previous cycles. Projects sanctioned today at US$13,000 per tonne copper may flood the market in the 2030s, precisely when bulls project maximum scarcity.
One of the bull case’s key pillars, the regulatory barriers to mine development, rests on the assumption that current political priorities will persist for decades. This seems unlikely. If copper shortages genuinely threaten economic growth, energy transition goals, national security, or living standards, governments possess the ability to streamline permitting dramatically. Copper is now designated a critical mineral in multiple countries. During World War II, regulatory barriers evaporated when materials became strategic priorities. Chile’s July 2025 licensing reforms demonstrate that change is possible when political will exists. If copper shortages materially impact electricity costs, vehicle prices, or infrastructure deployment, expect regulatory reforms across jurisdictions. Emergency provisions, fast-track permitting, and exemptions from normal review processes, combined with general urgency in operations and investment, could compress 17-year timelines to 5-7 years. The 17-year average reflects current political preferences, not necessarily fixed constraints.
The bull case also hinges on a lack of substitutions for copper and while this is a reasonable bet to make, it is certainly not a guarantee. This assessment may underestimate the innovation that high sustained copper prices would trigger. At US$10,000-15,000 per tonne or beyond, enormous incentives exist to find alternatives to copper.
Aluminium represents the most obvious substitute. With 60% of copper’s conductivity, aluminium requires larger cross-sections but costs half as much and weighs one-third as much. Research by Pacific Northwest National Laboratory and Ohio University has produced the first-ever simulation of aluminium conductivity at the atomic level, identifying pathways to increase conductivity through structural modifications and additives. If aluminium’s conductivity could be increased even modestly, it would become viable for many applications currently requiring copper. Aluminium already serves as a copper substitute in power transmission, where its light weight allows longer spans between towers. It’s widely used in solar panel frames, offshore wind turbine structures, and some electrical wiring. Automotive manufacturers are researching aluminium for EV motor windings, where a small efficiency loss is offset by weight savings. An estimated 90% of copper could theoretically be replaced by aluminium, although this is quite optimistic for aluminium.
Carbon Nanotubes (CNTs) represent a more radical alternative. Continuous CNT cables several kilometres long have been produced, offering extraordinary properties: higher conductivity than copper, superior thermal performance, extreme tensile strength (10 times that of steel), half the weight of aluminium, and 100 times the flex life of copper. Companies like DexMat are commercialising CNT-based materials called Galvorn for niche applications, with government and venture capital funding supporting scale-up. Whilst CNT production remains expensive and limited, technology curves suggest costs could fall dramatically with scale, potentially disrupting copper markets.
Advanced Composites combining different materials could leverage each material’s strengths whilst minimising weaknesses. Steel-core aluminium conductors already serve high-tension transmission. Further innovations in composite conductors could expand their application range.
Superconductors, whilst requiring cryogenic cooling, eliminate resistance entirely. Advances in high-temperature superconductors and more efficient cooling systems could make them economically viable for certain applications, particularly data centres and urban distribution where cooling infrastructure costs can be amortised across many users.
The key insight is that current substitution assessments assume today’s technology and prices. At US$20,000 per tonne copper (a plausible bull-case scenario), the economics of alternatives shift dramatically, accelerating research, development, and deployment.
Moving beyond the threat of substitutes, the bull case treats copper demand as price-inelastic, driven by policy mandates. However, high copper prices will inevitably, sooner or later, feed through to end-product costs. If EVs, renewable installations, and electronics become significantly more expensive, deployment rates could slow, policy timelines could extend, or alternative approaches could gain favour. Policy goals are typically stated in terms of outcomes (emissions reductions, renewable capacity) rather than specific technologies. If copper constraints make solar panels prohibitively expensive, policy might shift towards nuclear power, which requires far less copper per megawatt. If EV costs rise, policy might pivot towards public transport, which serves more people per kilogram of copper. Engineering efficiency also responds to price signals. Copper windings can be optimised, conductor cross-sections minimised, and designs improved to reduce copper intensity per unit of output. These incremental improvements, multiplied across billions of devices, could substantially reduce aggregate demand.
Another threat against the bull case exists in the form of innovations in extraction and processing. High prices tend to draw funding for innovation and competition, and new extraction and processing methods. McKinsey has identified several promising technologies already in development. These include better ways to capture copper particles that currently get lost in processing, new chemical methods for extracting copper from sulphide ores, and artificial intelligence systems that can optimise every step of the extraction process to squeeze more copper from each tonne of rock. But the really game-changing possibilities go further. In-situ leaching, which is essentially dissolving copper underground and pumping it to the surface, could work on deposits that can’t be mined conventionally. Scientists are experimenting with bacteria that naturally concentrate copper, turning what sounds like science fiction into a practical mining method. Even old waste piles from past mining operations could be worth reprocessing with better technology. More controversially, companies are eyeing copper-rich nodules sitting on the deep ocean floor. And while it sounds far-fetched, some are even thinking decades ahead to mining asteroids in space.
The crucial point is this: we can’t predict when breakthroughs will happen, but history shows they tend to arrive precisely when they’re needed most. High copper prices create powerful financial incentives for innovation and even if there are no direct copper substitutes discovered, the process of creating refined copper may improve significantly itself. When there’s serious money to be made solving a problem, human ingenuity has a remarkable track record of finding solutions. Necessity is the mother of invention.
A further point for the bear case lies in that whilst recycling cannot immediately fill the supply gap, infrastructure to improve collection, sorting, and reprocessing can scale faster than new mines can open. Policies mandating product take-back, deposit schemes for electronics, and urban mining initiatives can substantially increase recycling rates. Copper’s value provides strong economic incentives for recovery. Unlike plastics, copper recycling is profitable at moderate scale. Every tonne recycled reduces the need for mined copper by one tonne, with far lower energy requirements and environmental impact.
In addition, economic headwinds could significantly dampen demand, undermining predictions of sustained price increases. This matters particularly because much of copper’s current demand comes from traditional uses not just the green energy transition. Construction, manufacturing, and general infrastructure still account for the majority of copper consumption globally. These sectors are business-cycle cyclical and sensitive to economic conditions; during recessions or slowdowns, construction projects get delayed, manufacturing contracts, and infrastructure spending often gets cut. As an example, China, as the world’s largest copper consumer, accounting for roughly 50% of global demand, China’s economic trajectory is crucial to any demand forecast. The country’s property sector alone has been a massive copper consumer for decades with wiring, plumbing, and air conditioning systems for countless apartment blocks and commercial buildings. Yet this sector is now contracting amid ongoing challenges with developer debt, demographic pressures, and changing government priorities. If China’s broader economic growth continues to slow, whether from property sector weakness, an ageing population, or reduced manufacturing activity, global copper demand takes a substantial hit regardless of how many electric vehicles are being built. The electrification story represents future demand growth, but it’s being layered onto a base of traditional demand that remains vulnerable to economic cycles. If economic headwinds cause traditional demand to soften significantly while new mines come online and recycling expands, the severe shortages that bullish forecasts predict may never materialise. The copper market could find itself adequately supplied, or even oversupplied, preventing the sustained price spikes that long-term bulls are anticipating.
Separately, Western nations have recognised the strategic vulnerability created by China’s dominance in copper refining (44% of global capacity). In response, governments in North America, Europe, and Australia are actively investing in domestic refining capacity through subsidies, loan guarantees, and public-private partnerships. This diversification effort addresses a genuine supply chain risk: even if mining output increases, inadequate refining capacity could create bottlenecks that limit the availability of finished copper. By building alternative refining infrastructure, Western nations are both securing their supply chains and adding global processing capacity that could ease potential constraints in the refining stage, ensuring that raw copper ore can be efficiently converted into the pure metal that manufacturers require.
All in all, the bear case against copper lies in the long-term cycle patterns of commodities. Ultimately, copper is a commodity without moat or durable competitive advantage. Whilst specific mines or positions in the value chain confer temporary advantages, the product itself is undifferentiated. This means that sustained high prices will eventually attract sufficient capital to resolve shortages. Historically, this tends to be the fundamental dynamic of all commodity markets. Unlike technology products with network effects or intellectual property protection, there are less barriers to prevent new entrants from developing copper mines, smelters, or substitutes if returns justify the investment, and especially if there is government support.
The Investment Situation
General Outlook
In terms of the short-term situation, copper reached record highs above US$13,000 per metric tonne in early January 2026, surging over 40% from the previous year. This rally has sparked differing views on price sustainability. Goldman Sachs expects global copper markets to remain in surplus through 2026 (300kt), with high prices dampening demand and boosting scrap supply. They forecast prices declining to US$11,000 per tonne by year-end, down from the January peak. Notably, major copper mining companies are pricing in US$5.49 per pound versus the current US$6.50, suggesting significant market scepticism about sustained high prices. Many analysts believe current prices have overshot fundamentals. Natalie Scott-Gray of StoneX noted: “While we have copper in a deeper deficit market year on year in 2026, we still do not see the market as historically out of balance... fundamentals certainly do not support copper at the current levels.” Steel’s muted reaction to tariff concerns when compared to copper’s frenzy suggests speculation may be driving copper’s premium. US tariff policy remains a wild card. Goldman Sachs expects a 15% tariff on refined copper by mid-2026, though election-year affordability concerns could delay this. Tariff uncertainty is supporting prices as US buyers front-load purchases. Meanwhile, Chinese demand for refined copper fell 8% year-on-year in Q4 2025 as stimulus effects faded.
The critical long-term investment question centres on two interrelated uncertainties: will long-term demand materialise as strongly as projected, and can supply keep pace if it does? On the demand side, Goldman Sachs Research expects demand for copper to overtake supply from 2029 onwards, with the grid and other power infrastructure projected to drive more than 60% of copper demand growth until 2030; adding the equivalent of another US in copper demand. Data centre demand growth remains an upside risk, with demand from data centres alone potentially reaching 475,000 tonnes in 2026, up from 2025’s 110,000 tonnes. However, these projections assume continued aggressive AI infrastructure buildout and electrification at current pace. Economic slowdowns, policy shifts, or technological changes could moderate growth. On the supply side, the picture remains constrained but not static. Countries including Chile, the Democratic Republic of Congo, Brazil, and Iran are expected to push global output up by 2.3% for 2026 against 2025’s growth of 1.2%. A litany of expansions and new mining projects are already starting to operate, though not at a pace sufficient to eliminate deficits. History suggests that sustained high prices trigger massive capital deployment, regulatory adjustments, and technological innovation. The question is timing: will shortages come at all or will they persist for 5 years, 10 years, or 15 years before supply catches up?
Exposure Options
Investors seeking copper exposure have several vehicles, each offering different risk-reward trade-offs. Major Mining Company Equities provide leveraged exposure to copper prices through operational gearing. Companies like Freeport-McMoRan (pure-play copper exposure), BHP Group (diversified with lower volatility), and Southern Copper (highest margins, lowest costs) offer direct participation in copper economics. Mining equities benefit from operational leverage, if copper prices rise 30%, company earnings might increase 60-100% or more due to fixed cost structures. However, they also face company-specific risks including operational disruptions, cost inflation, management execution, and capital allocation decisions. Forward P/E ratios ranging from 13x (BHP) to 27x (Southern Copper) reflect varying quality and growth expectations. Copper Mining ETFs such as COPX, ICOP, and COPP provide diversified baskets of copper producers with expense ratios of 0.47-1.06%. These vehicles reduce single-company risk whilst maintaining copper exposure, though they may underperform spot copper prices due to operational issues across holdings. ETFs work well for investors wanting sector exposure without individual stock selection. Copper Futures ETFs like CPER offer direct price exposure without equity market correlation or company-specific risks. However, they’re designed for short-term tactical trades rather than long-term holds due to roll yield effects from futures term structures. As futures contracts approach expiration, the ETF must “roll” into new contracts; when future-dated contracts are more expensive than near-term ones, this rolling process creates losses that erode returns over time, even if copper prices rise. Higher expense ratios (1.06%) and tracking complexities make them less suitable for buy-and-hold investors. Physical Copper remains impractical for most investors given storage costs and lack of accessible vault products, unlike precious metals. Junior miners and explorers provide asymmetric upside potential (potentially multibagger returns if projects succeed) but carry substantial risks from development failures, financing challenges, and permitting obstacles. These speculative positions require careful sizing and due diligence.
Investment Considerations
*Projections are for informational purposes only.
The copper investment thesis must be evaluated not merely on its own merits but against alternative uses of capital and the returns required to justify the risks undertaken. If copper reaches US$15,000-20,000 per tonne by the late 2020s as structural deficits materialise, representing 15-50% upside from current US$13,000 levels, mining company equities could deliver substantially higher returns through operational leverage. A pure-play producer might even see earnings double or more at US$18,000 copper versus US$13,000. While exact numbers are hard to say, and one should always do their own valuation research and analysis whether it be through multiples valuation, DCF model etc., if earnings were to jump this significantly, one could assume a higher than equity market average return. However, this bull case requires multiple conditions to hold: demand must grow as projected, supply constraints must persist, no major substitutes can emerge, and macroeconomic conditions must remain supportive. The probability-weighted expected return depends on one’s conviction in each assumption.
If copper prices decline toward US$9,000-10,000 per tonne as supply responds and demand disappoints—a 20-30% downside from current levels—mining equities could fall 40-60% or more due to reverse operational leverage and margin compression. Even if prices remain stable near US$11,000-12,000 (Goldman Sachs’s base case), equity returns might simply track broader market averages or underperform if operational issues emerge. In this scenario, investors achieve mediocre single-digit returns whilst bearing substantial commodity and operational risks.
Capital allocated to copper carries opportunity cost measured against alternative investments. As a reminder, the S&P 500 has delivered approximately 10% annualised returns historically. Government bonds currently yield 4-5% with minimal risk. Technology stocks, whilst volatile, have outperformed materials sectors over most timeframes. Real estate, other commodities, and international equities all compete for investor capital.
The copper thesis is fundamentally long-term, requiring 5-10 years for structural deficits to fully materialise. Shorter time horizons face near-term volatility from speculation, economic cycles, and Chinese demand fluctuations. As mentioned before, Goldman Sachs expects prices to decline through 2026 before structural deficits emerge post-2029.
Compared to other commodities, copper presents unique characteristics. Unlike oil (subject to geopolitical shocks and OPEC manipulation) or agricultural commodities (weather-dependent), copper’s supply-demand dynamics are relatively transparent and forecastable. However, unlike precious metals, copper generates minimal portfolio insurance value during crises. Gold rallies during market stress; copper tends to fall with economic activity. This limits copper’s portfolio diversification benefits.
Perhaps the most critical consideration is how much future growth the current US$13,000 copper price already reflects. If markets have efficiently priced in 80% of the bull case, limited upside remains whilst downside risks loom large. Conversely, if current prices reflect only modest supply tightness, substantial upside exists. Goldman Sachs’s view that miners are pricing in US$5.49 per pound versus the current US$6.50 suggests significant optimism is already embedded in equity valuations, though copper bulls would argue the market remains sceptical of structural deficits.
Navigating Uncertainty
The copper market faces genuine uncertainty. The bull case presents compelling evidence for a prolonged structural deficit: demand is surging due to policy-driven electrification, supply growth faces unprecedented geological and regulatory constraints, the 17-year development timeline creates enormous lag in supply response, and substitutes remain limited at scale. Current market conditions in the form of record prices, depleted inventories, and supply disruptions support this narrative.
Yet the bear case offers important cautionary lessons from commodity market history. High prices inevitably trigger supply responses, even if delayed. Regulatory barriers that seem immutable can vanish when political will exists. Substitution potential may be far larger than current assessments suggest, particularly as innovation accelerates under price pressure. Demand proves more elastic than forecast when costs rise. And fundamentally, no commodity shortage persists indefinitely because markets adapt.
The most likely outcome may lie between the extremes. Copper could experience a prolonged period of elevated prices and periodic scarcity through the late 2020s and early 2030s as demand surges faster than new supply arrives. This would create genuine constraints on electrification and technology deployment, raising costs and potentially slowing the energy transition. Prices could reach US$15,000-20,000 per tonne or higher during acute shortages.
However, these high prices would simultaneously accelerate all the bear-case dynamics: aggressive mine development, regulatory streamlining, substitution research and deployment, recycling infrastructure, and efficiency improvements. By the late 2030s and 2040s, when the Bernstein research suggests supply catches up, the market could shift from scarcity to balance or even glut, particularly if demand growth disappoints due to economic slowdown, technological shifts, or policy changes.
For investors, copper presents both opportunity and risk. The structural shortage narrative could drive sustained high prices and strong returns for producers. Yet commodity market history urges caution against assuming shortages persist indefinitely. The eventual supply response, when it arrives, could be swift and overwhelming.
For society, copper scarcity represents a challenge to the pace of energy transition and technological change, but not an insurmountable barrier. Human ingenuity, market forces, and adaptive capacity have solved similar challenges throughout history. The question is not whether copper constraints will ultimately be overcome, but rather how long the adjustment takes, how much it costs, and what innovations emerge along the way.
*Disclaimer: This information is for general informational purposes only and does not constitute financial, investment, or professional advice. The author may hold positions in the assets or companies discussed.
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