Why the Copper Price Will Double and More: A Detailed Summary
Key Concepts:
- Real Copper Price: Copper price adjusted for inflation, typically measured against gold.
- TC/RCs: Treatment and Refining Charges – fees paid by miners to smelters for processing concentrate. Lower TCs/RCs indicate tighter supply.
- Block Caving: A large-scale underground mining technique susceptible to disruptions.
- Inelastic Supply: Copper supply is slow to respond to price increases due to long lead times for new projects.
- Social License to Operate: The acceptance and support of mining projects by local communities and stakeholders.
- Capital Intensity: The amount of capital expenditure required to generate a unit of production.
- Brady Breer: A highly fractured, unstable rock mass often found in mining environments, posing operational challenges.
1. Historical Copper Price Trends & Demand Dynamics
The nominal copper price has shown an upward trend over 25 years, however, the real copper price (rebased to August 2000 and measured in gold units) has been declining for decades. As of a few weeks prior to the presentation (late August 2024), the price exceeded $5/pound, but remains down 60% since August 2000 and 80% from its historical high. This decline is attributed to two primary factors: sub-trend physical demand post-2008 financial crisis and relatively strong mine supply.
Global copper demand grew at a compound annual rate of 3.1% since 1950, but slowed to 1.9% between 2005 and 2021 (BHP copper study, 2024). BHP forecasts a future growth rate of 2.6% annually through 2035. UBS data (September/October 2025) breaks down demand by sector: 25% construction, 22% electrical infrastructure, 30% renewables, EVs, and other transport, and 23% machinery and other. The “new economy” (electrification and decarbonization) is driving demand growth, representing nearly 30% of total demand, off a larger base than traditional infrastructure.
2. Mine Supply: Past Trends & Current Challenges
Mine supply has been relatively strong since 2009, largely due to projects initiated before the 2008 financial crisis and before 2016. Key projects include Tenke Fungurume (2009), Sentinel (First Quantum, 2016), and several Chinese-funded mines. While some new mines have come online, the period saw a hiatus in investment post-crisis.
Notably, First Quantum experienced setbacks in Panama, and Anglo American’s Quellaveco (QB2) faced significant capex overruns. China has been a dominant investor in the Democratic Republic of Congo (DRC). The speaker highlights a trend: Western companies have struggled with project execution since the global financial crisis, while Chinese investment remains robust. New mine starts have been consistently below 300,000 tons per annum for the last three years (Woodmac/UBS, October 2025).
3. The Demand Surge: Electrification & AI
The presentation argues a significant shift is underway. Electrification and decarbonization are creating an “insatiable appetite for electricity.” Electricity demand grew by 2.2% in 2024 (IEA data), exceeding global GDP growth of 2%. Critically, electricity demand growth was 4.3%, with renewables accounting for 38% of that growth. Final electricity consumption is increasing rapidly in China and advanced economies.
Electric vehicles (EVs) require 2-3 times more copper than internal combustion engine vehicles, and demand is projected to continue rising. The Dutch government estimates $200 billion will be needed for grid upgrades in the Netherlands alone by 2040. The speaker emphasizes that electrification and the rise of AI are not just about data or electrons; they require substantial physical infrastructure. Low-cost energy is crucial for economic activity, citing the challenges faced by smelters in high-cost energy environments like Australia compared to China.
4. Supply Constraints & Project Approvals
The speaker estimates a current supply deficit of approximately 500,000 tons per annum (potentially 800,000 tons including the loss of Cobra Panama). To meet both “old economy” and new demand (including AI-driven data centers), an estimated 600,000-700,000 tons of new supply are needed annually. This equates to needing 1.5 “super giant” mines (around 500,000 tons per annum) every year, a rate that is not being achieved.
Project approvals are declining. Research from Woodmac and UBS (October 2025) shows new project approvals below 300,000 tons per annum for the past three years. Many large projects require sustained copper prices above $20,000/ton to be viable. The speaker identifies “improbable jurisdictions” (Pakistan, Ecuador) as posing significant risks.
5. Geographic Focus: Chile & the DRC
The speaker believes future copper supply will primarily come from Chile and the DRC, with contributions from Peru, the US, and Canada. Chile leads in reserves and production, while China dominates refined copper production (36-37% share). Lower Treatment and Refining Charges (TC/RCs) demonstrate the tightness of the concentrate market and the leverage of Chinese smelters.
Chile’s mining history is extensive, with innovation in techniques like heap leaching and block caving. The political landscape is shifting towards being more pro-business, and regulatory reforms are underway, even under a socialist government. Mining accounts for over 60% of Chile’s exports and 22% of its GDP. Kachillo (Chilean Copper Commission) forecasts a 100,000-ton increase in Chilean supply by 2034, requiring $83 billion in investment.
6. Case Studies: BHP & Codelco
BHP, the world’s largest copper producer, plans to invest $5-6 billion in Escondida, but this is projected to decrease production by 20%. BHP’s long-term production outlook for Chile remains flat at 1.4 million tons per annum. This illustrates the capital intensity and challenges of maintaining production in a mature industry.
Codelco, Chile’s state-owned copper company, is capital-starved and seeking partners. The speaker highlights the complexities of block caving, noting its sensitivity to operational changes and the potential for disruptions (citing Freeport’s mud inrush incident). Block caving operations require stable production rates and are prone to delays in recovery from disruptions.
7. Conclusion & Price Outlook
The speaker concludes that demand growth will significantly exceed 2.5% per annum, driven by electrification and AI. A sustained supply-demand deficit is expected from 2026 onwards. The copper industry is mature, inelastic, and price insensitive, meaning demand can rise without triggering a rapid supply response.
The speaker predicts copper prices will reach $20,000-$30,000 per ton (over $9/pound), and believes Fitzroy Minerals is well-positioned to benefit from this price increase. He emphasizes the rarity and value of near-term copper assets and the need for incentive prices above $20,000/ton to stimulate new production.
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