Copper is the new great panic as prices rocket

First Published in Business Day on   May 2nd, 2024   |   by   Gracelin Baskaran

Copper is the new great panic as prices rocket

Values for the bedrock of energy and economic security have hit a three-year high, and investment in exploration backs the story

The mining sector remains in the trenches, with cobalt, lithium and nickel prices down more than 45% since the start of last year. The financial sector is averse to lending to brownfield and greenfield projects. It feels as if we’re at a sectoral impasse, which could have a steep cost later when we need these minerals and metals. 

The only spark of light is copper. Prices are at their highest in three years, and investment in exploration backs the story. Global exploration is at a five-year high. Between 2021 and 2023, exploration expenditures rose 22%, reaching $3.2bn, a number that will be exceeded again this year. 

The change in commodity prices is fascinating. Three years ago the world was in a panic about lithium. No longer, due to big deposit discoveries in North America, increased recycling capacity and great substitutability. 

Copper is the new great panic. Chile, Argentina and Bolivia form the lithium triangle, which has about 60% of global reserves. Yet, last year 82% of all investment in Chile’s mining sector was in copper, while lithium accounted for just 3%. In Peru, copper also received the largest share of investment at 47%.

In Zambia, copper exploration is at a 10-year high — significantly more than the preceding years in dollar terms. In 2022, Zambia attracted $42.9m in exploration, which jumped to $79.6m in 2023.

One reason is growing uncertainty about the electric vehicle (EV) transition. Some of this is politically motivated. The US’s flagship climate legislation, the Inflation Reduction Act, provides big tax credits for sourcing the minerals and metals required for EVs, along with manufacturing them.

It’s no secret that the Republican Party opposes the act. In a year of electoral uncertainty, and given Donald Trump’s general view of climate change (he pulled out of the Paris Agreement) there is concern that he would push to overturn the act if elected. If he did, it would be impossible for the US car industry to remain competitive with China. This would bring conventional internal combustion engines back into vogue in the US. 


Trump loves mining in general, but clean technology for the energy transition (solar panels, wind turbines) or EVs are far from a priority for him. His motivation for minerals security would be rooted in national security. Were he to be re-elected president, support for the minerals needed for tanks, satellites, lasers and missile defence systems would rise. Those are generally a different set of commodities than are needed for EV electric vehicle batteries. 

However, copper is the bedrock of energy and economic security. Data centres in the US and Western allies are energy intensive. It will require big increases in energy generation and transmission infrastructure, both of which require much copper. 

Copper is required for all forms of technology, and it is also used in plumbing, roofing, industrial operations, wiring, piping, kitchen sinks, tools and conventional gasoline and diesel vehicles. It is also needed for the manufacture of household appliances such as washing machines.

Regarding energy security, the International Energy Agency has forecast copper demand to rocket from 8-million tonnes in 2020 to 42-million tonnes in 2050. The supply shortage is already reflected in pricing. That three-year price high is a harbinger of what is to come — global production is not on a par with demand and the mining industry knows it, which is why it is disproportionately crowding in resources to extract the base metal. 

I spent some time with private equity firms in London and New York over the past month. There’s a bearish sentiment towards almost all commodities. The one commodity they are willing to put their money behind? Copper.

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