Investing in Copper

Copper is a very intresting and compelling investement opportuuniy currently in commodity market. Potenially offering one of the aymmetric risk-reward setups in the next 5 years.

The current situation, is projected supply deficit of between 330,000-407,000 tonnes for 2026, repreenting a dramatic swing from 2025’s 180,000-tonee surplus. The global demand growing 10% to reach 30+ milliontons by 2030 (from 27 million today).

The deficit comes from three major areas. Underinvestment in new mines due to years of of low copper prices discourged exploration and development. New mines take 10-15 years from discovery to production. The declining ore grade has from 1.5% in 1900 to 0.5% today meaning more mining for the same output. Finally 12 major expansion projects scheduled for 2026 could add 400,000 tonnes, but execuation risks are high. discoveryalert

Demand Drivers

Copper demand will countine to driven upwards as energy transition towards more greener scource of energy countine. reuters

1. Energy Vehicles require 4x more copper than internal combustion vehicle (83kg vs 23kg on average). EV fleet projected to reach 145 million by 2030 (13x current levels). All of this means copper demand from the EV market will increase form 1.1 million tonnes (2024) to 2.2 million tonnes in 2030

2. Renewable Energy from 2020 to 2030 the demand for copper is going to double from 5.8 to 10.8 megatonnes, growing from 24% to 36% of total demand.

3. Power grid infrasture has projected growth of 43% in copper demand (12.54 to 17.87 million tonnes from 2025 to 2030) Due to massive investment in grid modernization for digital economy (data center) and electrification. The power gtid infrasture is the largest single demand driver.

4. Data centers & AI infrastructure require massive power distribuation which requires hundreds of tonnes of copper for each system

Risks

1. Demand destruction (recession) depending on the level of recession we could see 10% (mild) to 22% (severe)

2. China slowdown represents 55% of global copper consumption so if there economy would slow we see a massive reducation in the consumpation of copper.

3. Substitution risk Aluminum can be used to substitute copper in some application (power transmission, heat exchangers). At $12,000/tonne it becomes economic viable to begin to use Aluminim. Fortuanly there is a limted effectiveness in key applications

4. Supply response if accelarted mine development and enhanced scrap reycling could offest 600,000 tonnes demand but this won’t be likely for another 10-15 years

   discoveryalert