Investing in Copper

Copper is a very interesting and compelling investment opportunity in the commodity market at the moment, potentially offering one of the best asymmetric risk-reward setups of the next 5 years.

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

The deficit comes from three major areas. Underinvestment in new mines, due to years of low copper prices, discouraged exploration and development, and new mines take 10-15 years from discovery to production. Ore grades have declined 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 execution risks are high. discoveryalert

Demand Drivers

Copper demand will continue to be driven upwards as the energy transition towards greener sources of energy continues. reuters

Electric vehicles require 4x more copper than internal combustion vehicles (83kg vs 23kg on average). The EV fleet is projected to reach 145 million by 2030 (13x current levels). All of this means copper demand from the EV market will increase from 1.1 million tonnes (2024) to 2.2 million tonnes in 2030.
Renewable energy demand for copper is going to double from 5.8 to 10.8 megatonnes between 2020 and 2030, growing from 24% to 36% of total demand.
Power grid infrastructure 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 modernisation for the digital economy (data centres) and electrification. Power grid infrastructure is the largest single demand driver.
Data centres and AI infrastructure require massive power distribution, which requires hundreds of tonnes of copper for each system.

Risks

Demand destruction (recession): depending on the severity of a recession we could see demand fall 10% (mild) to 22% (severe).
China slowdown: China represents 55% of global copper consumption, so if its economy slows we would see a massive reduction in copper consumption.
Substitution risk: aluminium can substitute for copper in some applications (power transmission, heat exchangers). At $12,000/tonne it becomes economically viable to switch to aluminium. Fortunately its effectiveness is limited in key applications.
Supply response: accelerated mine development and enhanced scrap recycling could offset 600,000 tonnes of demand, but this is unlikely for another 10-15 years.

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