Copper exchange inventories have climbed above 1 million tons for the first time in 21 years. Meanwhile, smelter activity has slowed, China’s demand softened, yet the price remains elevated despite pulling back from January highs.
The answer lies in a lack of confidence in long-term supply. The market has entered an era of electricity intensity. Therefore, copper is no longer merely a cyclical industrial input but a foundational infrastructure for the 21st-century economy.
Months Vs. Decades
At a recent BMO global mining conference, Teck Resources Ltd.’s (NYSE:TECK) CEO Jonathan Price framed copper as “at the heart of electrification.” He pointed to three structural drivers reshaping demand: electrification, digital infrastructure, and rapid urbanization.
Electric vehicles require roughly 4 times as much copper as internal combustion cars. Solar farms, wind turbines, and the grid expansions that connect them are copper-heavy. Meanwhile, hyperscale data centers, the physical backbone of AI and cloud computing, are being rolled out at unprecedented speed.
“There is an emerging disconnect between the lead time to bring on new mine supply versus the underlying demand drivers,” Price warned, according to Mining Weekly. He clarified that a new data center can be built in as little as 9 months, while a new mine might take more than 20 years.
Strategic Responses
Major miners are responding with scale and focus. Teck’s $53 billion merger with Anglo American plc (OTCQX:AAUKF) would create “Anglo Teck,” a top-five global copper producer with over 70% exposure to the metal.
Others are doubling down organically. After failing to acquire Anglo American, BHP Group Limited (NYSE:BHP) is prioritizing growth at Escondida, Pampa Norte, and the Vicuña project rather than chasing large acquisitions.
Rio Tinto Plc (NYSE:RIO) has allocated 85% of its exploration budget to copper, leading with the Oyu Tolgoi expansion in Mongolia. Glencore Plc (OTCPK: GLCNF) is expanding in the DRC, targeting 300,000 tons annually at Kamoto Copper Company and outlining plans to nearly double output over the next decade.
Growth in Emerging Markets
Supply-side numbers are tightening as existing mines face surging capex just to maintain current production. According to Kitco, veteran investor Rick Rule puts that number at $250 billion over the next 10 years. Thus, the focus has shifted to emerging markets.
For Marna Cloete, CEO of Ivanhoe Mines Ltd. (OTCQX:IVPAF), the focus is on the Democratic Republic of Congo (DRC). This African country has emerged as the world’s second-largest copper producer. It grew output by around 400% over the past decade and now amounts to 14% of global supply. Ivanhoe’s Kamoa-Kakula complex alone is expected to produce up to 420,000 tons this year, with expansion plans targeting more than 500,000 tons annually.
“DRC is really at the center of the critical metal race. It’s chasing Chile for the world’s biggest producer.” Cloete said in an interview for BNN Bloomberg.
Despite being rich in gold and particularly in cobalt, Ivanhoe doesn’t produce either in the DRC. Yet, given copper’s importance, Cloete is not losing sleep over geology.
“Copper is going places. We are very bullish on copper,” she concluded.
Photo by Ziadi Lotfi via Shutterstock
