AI data centers are set to triple global power demand by 2030. Each Nvidia GB200 rack (roughly the size of a refrigerator) requires nearly 2 miles of copper cabling. Multiply that across thousands of data centers under construction, and you begin to see the scale of what's coming.
Supply is barely keeping up. Annual copper production growth covers only 2% of projected demand. Refined copper forecasts for 2026 have flipped from a surplus projection of 209,000 tonnes to a 150,000-tonne deficit as of October. New mines take 7 to 15 years to develop, and existing operations face declining ore grades and rising extraction costs.
Demand on the other hand, has been accelerating across three vectors simultaneously: grid electrification, AI infrastructure buildout, and renewable energy deployment.
The case for an unprecedented imbalance is simple: structural supply constraints are facing exponential demand growth. Our analysis sees copper breaking $12,000 per tonne within 18 months, with potential for sustained pricing above that threshold.
In this edition of Impactfull Weekly, we dive deeper into copper's growth drivers, the mechanics behind this supply-demand dislocation, and the investment opportunities across the value chain.
From mines to cables, copper’s transformation
Four stages of the value chain
The first stage is the extraction of copper ore from the earth's crust. While copper is relatively common (ranking 25th in abundance in Earth’s crust), economically viable concentrations are increasingly rare. Production is highly concentrated in a few key regions: Chile, Peru, the Democratic Republic of Congo, Zambia, and Indonesia.
Stage 1: Mining
There are two primary extraction methods, each with distinct economic and technical profiles:
Open pit mining dominates global production. Mines like Escondida in Chile and Morenci in Arizona excavate massive volumes of ore, processing material with grades as low as 0.5% copper. The economics depend on scale: moving 200 tonnes of rock to extract 1 tonne of copper concentrate requires enormous capital investment in trucks, shovels, and processing facilities.
- Advantages: Lower operating costs per tonne at scale, well-understood technology
- Risks: Declining ore grades mean ever-larger pits and waste dumps; water-intensive in increasingly water-scarce regions
Underground mining becomes necessary as surface deposits deplete. Mines like El Teniente in Chile and Grasberg in Indonesia have transitioned from open pit to underground block caving, a technique that allows gravity to do much of the work.
- Key consideration: Underground operations in Mongolia are ramping toward 500,000 tonnes annually, representing one of the few major sources of new supply this decade.
The critical constraint at the mining stage is ore grade decline.
Global average grades have fallen from roughly 1.2% in 1990 to approximately 0.52% today, a decline of more than 50%. Producing the same amount of copper now requires processing nearly twice as much rock, consuming proportionally more energy, water, and capital.
Stage 2: Concentration
Once mined, copper ore must be crushed, ground, and subjected to flotation (process of blowing air into the solution to float copper bubbles) to produce copper concentrate containing 24-40% copper (typically around 30%). This copper ore concentrate is the primary traded commodity in the copper supply chain.
Stage 3: Smelting and refining
(source: Liberty Copper)
Copper concentrate must be smelted to produce blister copper (98-99.5% purity), then electrolytically refined to produce copper cathode at 99.99% purity. This is the form that enters fabrication and manufacturing.
Matter of fact: China now controls 44-45% of global refined copper production, up from next to nothing two decades ago. Chinese smelters have added roughly 75% of all global capacity since 2000, and this concentration is projected to reach 50% by 2040.
Stage 4: Fabrication
The final stage involves transforming copper cathode into wire, tube, sheet, and other products. China dominates here as well, controlling approximately 50% of global fabrication capacity.
For investors, the key insight here is that the copper value chain has become bifurcated: mining remains geographically diversified across the Americas, Africa, and Australia, but downstream processing is heavily concentrated in China.
Conductivity, the secret behind copper
The primary economic advantage of copper stems from its exceptional electrical conductivity, which is second only to silver among commercially viable metals. This physical reality dictates the economics of the entire industry.
Conductivity is measured against the International Annealed Copper Standard (IACS), where copper defines the benchmark at 100%. To understand why copper is so difficult to replace:
Metal | Conductivity (IACS) | Practical implication |
Silver | 106% | Too expensive for bulk applications |
Copper | 100% | The commercial standard |
Gold | 70% | Reserved for corrosion-critical contacts |
Aluminium | 61% | Requires 40% larger cross-section for same current |
This conductivity advantage creates what we might call an "electrical moat." For the same amount of current, aluminium wiring needs to be significantly thicker, heavier, and takes up more space. In applications where space is constrained, such as inside an EV motor, a smartphone, or a data centre rack, copper has no practical substitute.
The thermal conductivity story is similar. Copper dissipates heat at roughly double the rate of aluminium. In high-power applications where overheating destroys equipment, this difference matters a ton.
What this means is: even if the price of copper doubles, most applications cannot economically switch away. The cost of redesigning products, accepting lower performance, or managing the fire risks associated with aluminium connections far exceeds the copper premium.
On the other hand, the cost of not having copper is catastrophic. Data centres cannot run without it. EVs cannot function without it. Power grids cannot transmit electricity without it. When this supply chain gets disrupted, copper prices can rise exponentially.
Global producer dynamics
Chile
With roughly 23% of global mine production, Chile remains the dominant force in copper supply. However, the country faces compounding challenges:
Codelco, the state-owned giant that was once the world's largest producer, has fallen to second place behind BHP.
Production in 2023 hit 1.324 million tonnes, the lowest in 25 years and roughly 72% of peak output in 2004. A tunnel collapse at El Teniente in July 2025 killed six workers, removed 48,000 tonnes from 2025 production, and will take three years to restore full operations.
The company requires $40+ billion in investment to arrest decline at ageing mines while developing new deposits. Meanwhile, Chile's new Mining Royalty Law (2023) has raised the maximum tax burden to 46.5%, with the average effective rate on large miners reaching approximately 59% through 2040.
Water constraints are reaching critical levels. The 13-year mega-drought has reduced reservoir capacity to 30% of normal levels. Chilean miners are now in an arms race to build desalination capacity, fundamentally altering the cost structure of operations.
Democratic Republic of Congo
The DRC has emerged as the fastest-growing copper province globally, now accounting for roughly 14% of world production. The star asset is Kamoa-Kakula, operated by Ivanhoe Mines, which produced 437,061 tonnes in 2024 (a 12% increase) to become the world's third-largest copper mine.
What makes Kamoa-Kakula remarkable is its ore grade: 4-5% copper versus the global average of 0.5-0.6%. This translates to dramatically lower processing costs and energy consumption per tonne of metal produced.
The risk, of course, is jurisdiction. The DRC has a troubled history with mining contracts, and infrastructure remains challenging. Power grid instability periodically curtails production, and export routes depend on road and rail networks through politically volatile regions.
Peru
Peru contributes roughly 11% of global copper production, but operational disruptions have become endemic. Las Bambas, one of the world's largest copper mines, has experienced approximately 600 days of community-related stoppages since 2016. In December 2022 and January 2023 alone, the mine lost 25,000 tonnes of monthly production to road blockades.
The country's political instability, with six presidents in five years, has created an uncertain permitting environment. Major expansion projects remain stalled as companies assess sovereign risk.
Panama Cobre shows supply vulnerability
Perhaps no event better illustrates copper supply vulnerability than the Cobre Panama mine closure. On November 28, 2023, Panama's Supreme Court ruled the mining contract unconstitutional following widespread protests. Overnight, 1.5% of global copper production vanished.
The mine, operated by First Quantum Minerals, had been producing over 300,000 tonnes annually and represented 5% of Panama's GDP. It remains under preservation and care, with periodic speculation about negotiated resolutions under President Mulino.
Growth drivers for copper
Bull case
The International Copper Study Group (ICSG) revised its market balance projections significantly in October 2025, shifting from a 209,000 tonne surplus forecast to a 150,000 tonne deficit for 2026. This represents a swing of nearly 360,000 tonnes in expected market balance.
Major investment banks have grown increasingly bullish:
Bank | 2026 forecast | Long-term view |
Goldman Sachs | $10,500/t | $15,000/t by 2035 |
J.P. Morgan | $12,500/t (Q2 peak) | Structural deficit |
Citi | $12,000/t (base), $14,000/t (bull) | Multi-year bull market |
UBS | $13,000/t (year-end) | Supply crisis by 2030 |
Supply gap projections are widening:
- Goldman Sachs: 8.2 million tonne deficit by 2030 without significant new investment
- IEA (Stated Policies Scenario): 30% supply shortfall by 2035
- S&P Global (Rocky Road Scenario): 10 million tonne annual deficit by 2035
The demand side of the copper equation is being driven by two converging megatrends that reinforce one another: the AI infrastructure buildout and the broader energy transition.
AI data centres
The most significant new development over the past 24 months is the direct involvement of hyperscalers in securing power and the infrastructure to deliver it.
AI models are energetically voracious. A single ChatGPT query can consume 10 to 30 times the energy of a standard Google search. Data centre power demand in the US is forecast to increase by 165% by 2030, driven by the buildout of training and inference clusters.
According to Goldman Sachs, global data centre power capacity will grow from approximately 55 GW today to 122 GW by 2030. AI's share of this capacity will rise from 14% to 27%.
Here is where copper becomes critical: every megawatt of data centre capacity requires approximately 27 tonnes of copper for power distribution, cooling systems, and connectivity infrastructure. By 2030, AI data centres alone are expected to require over 1 million tonnes of copper annually.
Grid spending to support data centre growth is projected to reach $720 billion through 2030, according to Goldman Sachs. Much of this will flow into copper-intensive transmission and distribution equipment.
Electric vehicles & energy transition
The energy transition creates copper demand across multiple vectors:
Electric vehicles contain 2.5-4x more copper than internal combustion engine vehicles:
Component | ICE vehicle | Battery EV |
Wiring | ~15 kg | ~30 kg |
Motor | Minimal | ~10-15 kg |
Battery | None | ~15-25 kg |
Total | 22-25 kg | 62-70 kg |
EV copper demand is projected to grow from 1.2 million tonnes in 2025 to 2.2 million tonnes by 2030. By 2040, transport sector copper demand could be 10x higher than 2023 levels.
Renewable energy is significantly more copper-intensive than fossil fuel generation:
Technology | Copper intensity |
Offshore wind | ~9,500 kg/MW |
Solar PV | ~5,500 kg/MW |
Onshore wind | ~4,700 kg/MW |
Natural gas | ~1,100 kg/MW |
Grid infrastructure may be the largest single driver. Bloomberg estimates the world needs to invest $15.8 trillion in grid infrastructure through 2050, adding 29 million kilometres of transmission and distribution lines. Underground cables, increasingly preferred in urban areas, require roughly twice as much copper as overhead lines.
Grid copper demand is projected to grow from 12.5 million tonnes in 2025 to nearly 15 million tonnes by 2030.
What could go wrong (and what to watch)
Substitution & thrifting
The most frequently cited bear case is aluminium substitution. At roughly 60% of copper's conductivity, aluminium can theoretically replace copper in many applications at significantly lower cost.
Goldman Sachs estimates that for every $1,000/tonne increase in the copper-aluminium price spread, net substitution increases by approximately 0.1%, potentially representing 175,000 tonnes of lost demand by 2035.
China has already enabled aluminium substitution in low-voltage power cables, putting 100,000-250,000 tonnes of annual copper demand at risk.
However, substitution has limits:
- Subsea cables: Aluminium's corrosion properties make it unsuitable
- High-performance electronics: Miniaturisation requires copper's conductivity
- Building interiors: Historical fire hazards from aluminium wiring led to stricter building codes
EV copper thrifting is more concerning. Copper content per EV is projected to decline from 99 kg in 2015 to 62 kg by 2030, a 37% reduction. Advances in flat wire motors, graphene-copper composites, and battery design all reduce copper intensity per vehicle.
The bull response: absolute EV volumes are growing faster than per-unit copper intensity is declining, resulting in net demand growth.
China demand weakness
(source: ICSG)
China consumes approximately 60% of global refined copper. Any significant slowdown in Chinese demand would transform the market balance.
The property sector remains the key variable. Chinese real estate has historically consumed 20-25% of domestic copper demand through wiring, plumbing, and air conditioning. The sector's prolonged downturn has been offset by grid investment and EV production, but a broader economic slowdown could shift the market from balanced to a 300,000-500,000 tonne surplus.
Shanghai Futures Exchange copper stockpiles climbed to a 51-month high of 339,964 tonnes in June 2024, a warning sign that domestic demand was not absorbing available supply.
New supply surprise
(source: Ivanhoe Mines)
Kamoa-Kakula is ramping faster than expected and could reach 600,000+ tonnes annually, with potential for 800,000 tonnes. Phases 1-3 achieved commercial production ahead of schedule.
However, the Grasberg mud rush incident in September 2025 removed approximately 300,000 tonnes from 2026 supply expectations, illustrating how quickly supply "surprises" can cut both ways.
Macroeconomic headwinds
Copper is famously cyclical. In the 2008 recession, prices fell 67%. In March 2020, copper touched its lowest level since 2016.
The metal has a strong negative correlation with the US dollar. A "higher-for-longer" interest rate environment that strengthens the dollar could pressure copper prices regardless of physical fundamentals.
Nuclear plants and data centres require multi-billion-dollar financing. If capital costs remain elevated, project deferrals could push demand growth further into the future.
Companies to watch
(our selection of companies bound to benefit from the copper supply-demand imbalance)
Compañía de Minas Buenaventura (NYSE: BVN) - Copper optionality with Peruvian precious metals producer
Buenaventura is Peru's largest publicly traded precious metals company, offering indirect copper exposure through its 19.58% stake in Cerro Verde, one of the world's largest copper mines operated by Freeport-McMoRan. They began commercialising Cerro Verde copper concentrate in Q2 2025.
Q3 2025 EBITDA from direct operations reached $202.1 million, a 48% YoY increase, while nine-month net income hit $424.2 million. The balance sheet is robust with $486 million in cash and a leverage ratio of just 0.41x.
Hudbay Minerals (TSX/NYSE: HBM) - North American copper growth pick
Hudbay is a copper-focused mid-tier producer with three operating mines. The company's Q3 2025 production of 24,205 tonnes of copper and 53,581 ounces of gold demonstrated operational resilience despite wildfire evacuations in Manitoba and temporary protests in Peru.
The Constancia mine in Peru is the portfolio cornerstone, contributing approximately 75% of consolidated copper production at industry-leading costs of $1.30/lb, positioning it as the lowest-cost open pit copper mine in South America. The transformational catalyst is Copper World in Arizona. The project received its final state permit (Air Quality) in January 2025, making it fully permitted for 20-year development on private land. In August 2025, Mitsubishi acquired a 30% stake for $600 million, validating its project economics.
Jiangxi Copper (SEHK: 358 / SSE: 600362) - China's integrated copper giant
Jiangxi Copper is China's largest integrated copper producer and the world's largest refined copper manufacturer, offering investors direct exposure to the country that consumes 60% of global copper supply. The company reported its strongest first-half earnings since 2011, with H1 2025 net income reaching 4.17 billion yuan ($585 million).
Their Guixi Smelter is the only copper smelting facility globally with annual production capacity exceeding one million tonnes per plant, enabling Jiangxi's vertical integration from mine to refined metal reinforcing structural advantages.
Smaller companies to invest in
To dig further into smaller companies bound to benefit from the copper supply-demand imbalance, create your own StockScreener like we did:
Bonus: ETFScreener
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Our Take
The copper market in 2026 sits at an inflection point.
The "margin of safety" that allowed the industry to muddle through with incremental supply additions is evaporating. Ore grades continue their multi-decade decline. Permitting timelines have stretched to 24+ years from discovery to production. Grassroots exploration has fallen to record lows as a share of industry budgets.
Meanwhile, demand from AI infrastructure and the energy transition is arriving faster than even bullish forecasts anticipated.
My opinion is that the supply deficit is structural and will not be easily resolved. New mines cannot be willed into existence; they require decades of development and billions in capital. The pipeline of projects capable of producing at scale is thin.
The price floor for copper is likely set at $5,200/tonne ($2.35/lb) due to cash costs. Below this level, marginal supply exits the market. The upside case depends on the pace of demand growth and the degree to which prices must rise to incentivise new supply and demand substitution.
Winners of this cycle are companies with:
- Permitted, producing assets in stable jurisdictions that can expand into deficit conditions
- Low-cost operations that generate free cash flow across the cycle
- Organic growth optionality that does not depend on new greenfield development
The market is not yet pricing in the severity of the supply-demand imbalance that appears to be emerging. Term contract negotiations, hyperscaler procurement strategies, and major miner capital allocation decisions all suggest insiders expect significantly higher prices.
Investors in copper are essentially betting that the mining industry cannot bring complex, capital-intensive, environmentally contentious projects online faster than the world's hunger for electrification grows. The data we’ve presented suggests the answer is "no," leaving the price of copper as the primary mechanism to balance the market.
Stay invested, cautiously.
