Rising Demand and Tight Supply Reshape the Copper Market | Tristan Pascal

Future Minerals Forum 2026: Copper Market Analysis & First Quantum Minerals – Detailed Summary

Key Concepts:

• Copper Price & Demand: Current price of $6/pound ($13,000/ton), driven by increasing demand from traditional sectors (grid infrastructure) and new sectors (renewable energy, EVs, data centers, AI).
• Supply Deficit: A growing gap between copper supply and demand, exacerbated by declining ore grades, increasing production costs, and permitting delays.
• Cost of Capital: Rising costs and limited availability of capital for mining projects, particularly for Western companies.
• Geopolitical Factors: Increasing competition between US & China, and the need for diversified and resilient supply chains.
• Structural Factors: Long-term challenges impacting copper supply, including inflation, declining ore grades, permitting difficulties, and longer development timelines.
• Riggy Regime (Argentina): An investment promotion regime designed to stimulate large-scale projects in Argentina, including mining.
• Panama Situation: The ongoing situation regarding the Cobre Panama mine, including suspension of operations, audit, and potential renegotiation of operating contracts.

1. Copper Market Dynamics & Price Drivers

The current copper price of $6 per pound (approximately $13,000 per ton) is primarily driven by short-term GDP outlooks (next 6 months). However, a significant long-term shift in supply and demand dynamics is emerging. Demand is accelerating due to established needs (electricity grids) and rapidly growing sectors like renewable energy, electric vehicles (EVs), and, crucially, data centers and Artificial Intelligence (AI). These new sectors require substantial grid reinforcement. Examples cited include transformer delivery times increasing from 6 months to 4 years. The world currently holds only 7-21 days of copper inventory, making the supply chain highly sensitive to disruptions.

2. Structural Challenges to Copper Supply

Beyond economic factors, several structural issues are hindering copper supply. These include:

• Declining Ore Grades: New copper deposits tend to have lower ore grades, requiring the processing of more tons of material.
• Increased Production Costs: Lower grades necessitate more infrastructure, energy, and water, driving up capital and operating costs. Inflation is further exacerbating these costs (steel, electricity, cement, labor).
• Permitting & Development Timelines: Obtaining permits is becoming more difficult and development times are lengthening.
• Cost of Capital: Mining companies, particularly Western firms, face challenges securing capital due to past project cost overruns and a perceived risk profile. This creates an uneven playing field, with companies from other regions potentially having access to more affordable capital.

3. S&P Global Report & Supply Deficit Projections

An S&P Global report highlighted that the copper supply deficit will be larger, faster, and longer-lasting than previously anticipated. In 2023, global copper usage was 26 million tons, with only 4 million tons recycled. While recycling will increase with rising prices, it won’t fully offset the growing demand. The demand from data centers and AI was not fully factored into previous forecasts. Furthermore, the substitution of silver with copper in solar panels (currently at $90/ounce silver) is an emerging demand factor not yet widely considered.

4. Tech Company Investment in Copper Supply

Leading North American tech companies are investing in their own power generation to avoid impacting domestic consumers. There's discussion about whether they might also invest directly in copper supply. Tristan Pascal believes this represents a reawakening to the importance of primary resource production, a sector that was previously outsourced. However, these companies would face the same challenges as traditional miners – permitting, infrastructure, and cost of capital. A potential model is for tech companies to provide capital to mining projects in exchange for offtake agreements, similar to the approach taken by Japanese smelters.

5. First Quantum Minerals: Strategy & Projects

First Quantum Minerals (FQM) prioritizes building new projects, demonstrated by the recent S3 expansion at Constanti in Zambia (25 million ton processor, adding 100,000 tons of production at a capital intensity of $12,000/ton). FQM aims to replicate this success with the Takataka project in Argentina. While the $6/pound copper price makes Takataka economically viable, financing decisions depend on securing permits, the ESIA (Environmental and Social Impact Assessment), and the Riggy application.

6. The Riggy Regime in Argentina

Argentina’s “Riggy” legislation, similar to that used in the oil and gas sector, provides a framework for investment, offering certainty and durability. The government is considering extending the application deadline for Riggy, which would benefit projects like Takataka.

7. Sector Consolidation & Buy vs. Build

The industry is witnessing mergers and acquisitions among large diversified companies. Pascal argues that while these deals offer synergies, they don’t address the core challenge of executing new greenfield projects. FQM differentiates itself through its in-house project execution capabilities, citing the successful and rapid completion of the S3 expansion and the Cobra Panama mine. FQM’s capital intensity for new projects is targeted to be below $25,000/ton.

8. First Quantum’s Financial Restructuring & Panama

Following the forced closure of the Cobre Panama mine in late 2023, FQM undertook significant financial restructuring, raising $1 billion to refinance debt and entering into a $1 billion gold streaming agreement with Royal Gold. The company believes it is now in a strong financial position. The situation in Panama remains a priority, with the new president expressing a desire to resolve the issue. An audit of the mine is underway, with results expected in March/April. FQM is committed to a constructive resolution that benefits Panama and reinforces its investment destination status.

9. Geopolitical Considerations & Supply Chain Resilience

The global copper supply chain has historically been interconnected, with contributions from various regions. However, increasing geopolitical tensions between the US and China are prompting a re-evaluation of supply chain resilience. Pascal emphasizes the need to re-establish understanding of primary copper production and to communicate the realities of modern, environmentally responsible mining practices.

10. 2026 Goals for First Quantum Minerals

FQM’s goals for 2026 are focused on disciplined growth, maintaining a strong balance sheet, successfully ramping up production at S3, and resolving the situation in Panama. The company aims to leverage its project execution capabilities to develop new greenfield projects responsibly.

Notable Quotes:

• Tristan Pascal: “The world has what 7 to 21 days of copper on the shelf at any one time. So any little disruption on that supply side kicks into the price.”
• Tristan Pascal: “We’re seeing demand substitution, and we’re seeing demand destruction. And you indicate some of the examples there, but we’re also seeing it, for example, in aluminium substitution into copper.”
• Tristan Pascal: “Hubris is a terrible thing. First Quantum we stand on each project that we deliver and they take an awful lot of work.”

Conclusion:

The copper market is facing a confluence of factors – rising demand, structural supply constraints, and geopolitical uncertainties – that are driving prices higher and creating a potentially prolonged supply deficit. First Quantum Minerals is positioning itself to capitalize on this environment through disciplined project execution, financial stability, and a commitment to responsible mining practices. The resolution of the Cobre Panama situation and the successful development of projects like Takataka will be crucial to the company’s future growth. The industry as a whole needs to address the challenges of cost of capital, permitting delays, and public perception to ensure a sustainable and resilient copper supply chain.