Copper in 2025: Energy Transition Belies Lack of New Mine Supply & Growing Smelter Appetite

• Copper prices recovered slightly in early December 2024 on China stimulus hopes but remain under pressure from a strong US dollar
• Copper mine supply growth is expected to peak in 2030 at 27.3 million tons before declining by 2035. Smelter demand for copper concentrate is forecast to outpace mine supply, driving the concentrate market into a 3.8 million ton deficit by 2035
• Analysts forecast copper prices to average between $8,000-$10,160/ton in 2025, with most expecting prices around $8,800-$9,500
• Key factors impacting copper prices in 2025 include the extent of China's economic stimulus, overcapacity in the smelting sector, and potential supply from the copper mines globally.
• Marimaca Copper, Pan Global Resources, Aldebaran Resources, Kodiak Copper and Collective Mining are among the copper mining companies to capitalize on the positive long-term outlook for copper, driven by electrification and the global energy transition.

Copper prices went on a rollercoaster ride in 2024, attracting interest from speculators connecting the metal to booming sectors like artificial intelligence. While near-term volatility remains elevated, the longer-term outlook appears constructive as the global energy transition and electrification trends boost demand. At the same time, a lack of new mine supply and growing smelter appetite are expected to shift the market into deficit.

Copper Price Outlook

Copper prices started 2024 on a strong note, with COMEX futures hitting an all-time high above $5/lb ($11,000/ton) in May [2] on speculative fervor. However, prices moderated in the second half as optimism faded and the US dollar strengthened, weighing on the entire commodities complex. Looking ahead to 2025, analyst price forecasts vary but are broadly positive, with expectations centering around $8,800-$9,500/ton.

The most optimistic 2025 prediction comes from Goldman Sachs at $10,160/ton ^[1], while Citi is on the lower end at $8,750/ton after "slashing its expectations" due to concerns around potential US trade tariffs under the incoming Trump administration. Chile's mining association projects a slightly higher range of $9,260-$9,920/ton. ^[2]

Ultimately, the path for prices will depend on the tug-of-war between supportive fundamental and policy drivers, and macroeconomic headwinds. As BMO Capital Markets noted, key factors to watch include the extent of stimulus from China, the currency outlook, and potential supply injection from the Cobre Panama mine.

Supply and Demand Dynamics

On the supply side, S&P Global forecasts that global copper mine production from currently operating assets will peak at 23.5 million tons in 2025-2026 before declining at an average rate of 2.3% per year through 2035^[3] driven by declining ore grades and mine closures. Meanwhile, output from committed new projects, though helping offset declines, is insufficient to maintain production levels.

According to International Energy Agency (IEA)'s report^[4], currently announced projects would be insufficient to meet 70% of the expected copper demand by 2035. The report also projected that although the supply of copper scrap is anticipated to grow until 2030, reaching 19 million tonnes from the current 16 million tonnes, it would later lag behind the increasing demand. By 2050, scrap volumes are forecast to reach 27 million tonnes; however, this would only be able to satisfy about three-quarters of the projected demand.

The slow and declining supply picture is concerning because it coincides with robust growth in smelter capacity. As a result, S&P Global expects the global refined copper market to be oversupplied in 2024, due in large part to increases in Chinese capacity and expects for the refined copper market to go moderate going into 2025 as smelters will be in more difficult times to source copper concentrate.

"It would be premature to abandon copper at this point, and that investors should ride out the current volatility to take longer-term advantage of the favorable market dynamics of rising demand and constrained supply growth through the energy transition, with its likely attendant price benefits and improved investment returns." - Investec Analysts to S&P Global^[5]

On the demand side, longer-term growth in copper consumption is expected to be driven by the global energy transition, electric vehicles, and economic development in emerging markets. However, construction activity in China remains a risk with the correction in Chinese construction activity that could offset most of the electrification demand in the near term.

Regional Supply Trends

Regional copper supply trends provide insight into the shifting landscape of global production. Latin America is forecast to remain the top contributor, with Chile leading the way. The country's mining association expects national production will range between 5.4m and 5.6m tonnes in 2025 though Chile's contribution to global mine supply growth may slow.

Other Latin American countries like Peru with the MMG's Las Bambas mine will also add meaningful volumes in the coming years. First Quantum's Cobre Panama mine is a key wildcard for the region after being shut down in 2023 over a tax dispute. Macquarie Research noted,

"Should the Cobre Panama mine restart, and we believe it ultimately will, then there is the potential for an additional 300ktpa of mine supply which would keep the market in a comfortable surplus out to 2029." ^[2]

Africa, specifically the Democratic Republic of Congo is likely to be once again responsible for the most additional tons next year as it has for the past four out of five years supported by growth at large mines like Ivanhoe Mines and Zijin Mining's Kamoa-Kakula. Elsewhere, incremental supply is also expected from countries like Russia, Uzbekistan, and Mongolia over the next few years.

Marimaca Copper

Marimaca Copper (TSXV:MARI) made an exciting new copper discovery at its Pampa Medina project in Chile, with grades up to 5% copper over 18 meters. The discovery suggests Pampa Medina could be part of a new copper district, and Marimaca has consolidated a dominant land position in the area. In 2025, the company will focus on parallel development - advancing the flagship Marimaca oxide project while aggressively exploring Pampa Medina. It also recently optioned the nearby Madrugador land package for $12 million over five years, which could add significant leachable copper resources.

Hayden Locke, CEO of Marimaca Copper is confident about the future,

"The long-term value drivers for copper haven’t changed at all. Although we're talking about electrification and the story of electrification, it's still a commodity driven by economic growth. Copper has performed exceptionally well given the challenges—interest rates haven’t come down, inflation has been stubbornly high, and China has been unhealthy but still demanding record amounts of copper. I’m exceptionally excited about what’s going to happen in 2025 and 2026."

With experienced leadership, a strengthened balance sheet, and a strategic land position in an emerging copper belt, Marimaca presents a compelling copper exploration and development story to capitalize on the positive long-term outlook for copper.

Pan Global Resources

Pan Global (TSXV:PGZ)'s La Romana is shaping up as an attractive copper-tin-silver project in a top-tier European jurisdiction. The company announced excellent tin metallurgy results from its La Romana project in Spain, achieving 63.9% tin recovery and a high concentrate grade of 63.2% using conventional gravity separation. This represents a significant 10% recovery improvement over previous estimates. The clean, high-quality tin concentrates with low levels of penalty elements further enhance the project's economics and marketability.

Tim Moody, CEO of Pan Global Resources emphasised the need for access to green copper for European traders.

"You’re not going to have an energy transition without lots of copper. It’s in the electrification of everything—wind, solar, all of these things are really copper-intensive. Having another source of copper in Europe, in a mining-friendly part of the world, is a real bonus."

With the potential to produce both copper and high-grade tin concentrates, Pan Global is well positioned to benefit from the compelling supply-demand fundamentals for both metals. The company's strategic position in the prolific Iberian Pyrite Belt, impressive drill results, and experienced team make it an interesting copper-tin exploration story.

Aldebaran Resources

Aldebaran Resources (TSXV:ALDE) is advancing the massive Altar copper-gold project in San Juan, Argentina. A recent resource update boosted measured and indicated copper by 100% to 22Blbs and inferred by over 500% to 10Blbs, putting Altar among the world's largest undeveloped copper projects. Aldebaran is aiming to complete a PEA on Altar by Q2 2025 and a PFS by end of 2026.

With one of the largest copper resources globally, Rio Tinto's involvement into the project through a $250M option agreement, and a clear path to development, Aldebaran provides standout exposure to copper as the world faces an impending supply crunch.

Kodiak Copper

Kodiak Copper (TSXV:KDK) delivered impressive drill results from its 100%-owned MPD project in Southern British Columbia in 2024, continuing to demonstrate the property's potential to host a major copper-gold porphyry system. The company discovered near-surface high-grade mineralization at the Adit Zone, intersecting 0.76% CuEq over 156m within 357m at 0.46% CuEq. Kodiak now has 10 significant mineralized zones at MPD, including the large, high-grade Gate and West Zones, with 20 additional targets to be evaluated.

In 2025, Kodiak will focus on expanding near-surface and higher-grade mineralization. The company has a strong capital position with Teck Resources as its largest shareholder. Led by the team behind Great Bear's $1.8B acquisition by Kinross, and situated in a low-cost, mining-friendly jurisdiction with excellent infrastructure, Kodiak provides attractive copper-gold exposure as demand rises due to electrification and the energy transition.

Magna Mining

Magna Mining's (TSXV:NICU) acquisition of KGHM's Sudbury assets, including the producing McCreedy West copper mine, is transformational. McCreedy West currently produces 300,000 tpa at 1.6% Cu with potential to expand to 1,500 tpd and generate $20-40M free cash flow in 2026. Magna plans to use this cash to restart the high-grade Levack mine (700,000 tonnes at 4% Cu historic resource) in 2026 and advance its Crean Hill project to production by 2027. CEO Jason Jessup and team have prior experience growing these assets at FNX Mining, which sold for $1.5B in 2010. Magna sees exploration upside in the 2km trend between McCreedy West and Levack, targeting a high-grade footwall copper discovery in the next 2 years. With near-term cash flow, a pipeline of development assets, and exploration potential, Magna offers attractive exposure to copper as demand surges from electrification and the energy transition.

GT Resources

GT Resources (TSXV:GT) is advancing an intriguing portfolio of high-grade nickel-copper projects in mining-friendly jurisdictions. Their Canalask project in the Yukon stands out for its exceptional infrastructure access, situated just 4km from the Alaska Highway, and has delivered impressive drill results including intercepts of 2% nickel over 20-30 meters. The project's high-grade sulfide mineralization is particularly attractive to smelters, differentiating it from the bulk tonnage nickel deposits currently being developed elsewhere in Canada.

Neil Pettigrew, VP of Exploration at GT Resources, highlighted the strategic value of these high-grade deposits in the current market:

"When you have high grade sulfide that is running two plus percent nickel plus other credits, copper, PGEs, that stuff is still economic in the current cycle. And so that material is also what the smelters are looking for... whereas this type of material is what those smelters are set up to process."

The company has also expanded its footprint with the North Rock project in Ontario, which features a 13-kilometer mineralized trend with historic resources of 1.2% copper and significant PGE credits. With Glencore as a significant investor, strong treasury position, and infrastructure-advantaged assets capable of producing premium concentrates, GT Resources represents an compelling nickel-copper exploration story in North America.

The Investment Thesis for Copper

• Copper's long-term demand outlook is robust, underpinned by global economic development and the energy transition. Electrification and trends like electric vehicles will boost copper requirements significantly in the coming decades.
• On the supply side, growth in mine production is forecast to peak in 2030 and then decline through 2035 due to deteriorating asset quality and a lack of new discoveries. This will likely lead to large deficits and support prices.
• Geopolitical factors are becoming increasingly important for copper, with many major producing countries prone to resource nationalism and political risks. Potential US policy support and efforts to reduce reliance on China are positives.
• While the near-term macro picture is cloudy, copper prices are expected to be relatively well supported in 2025 based on constrained supply, stimulus measures in China, and persistent longer-term deficits. Current price levels offer attractive upside if the bull case materializes.
• Key watchpoints include the speed of copper demand growth, the ability of mining companies to bring on new supply, treatment charges and smelter bottlenecks, the US dollar trajectory, and economic conditions in top consumer China.

The outlook for copper features both opportunities and risks for investors. Prices are forecast to remain supportive in 2025, but the upside may be capped by macro headwinds and a still-ample refined metal market. Longer-term, copper's supply and demand fundamentals paint a compellingly bullish picture as mine production peaks and then declines while the world's appetite for copper grows due to economic development and decarbonization trends.

For investors, copper exposure offers a way to benefit from the global energy transition while navigating near-term volatility. Ultimately, the key to realizing the copper opportunity likely lies in taking a patient approach and selectively investing in quality assets that can weather the cycle.

_References:

1. _{Mining Weekly (December 2024). Goldman Sachs Raises 2025 Aluminum, Copper Price Outlook}
2. _{Els, Frik (December 2024). Copper Price: What’s in Store for 2025}
3. _{Soares, A. (November 2021). Copper Project Pipeline — Project Shortage to See Supply Lag Demand Post-2025}
4. _{Chew, Carman (November 2024). Copper Recycling Must Accelerate to Meet Green Energy Demand, IEA Says}
5. _{Keen, Kip (August 2024). High Copper Inventories to Weigh on Price Amid Demand Recovery}
6. _{Keen, Kip (December 2024). Commodities 2025: Trump Trade Tactics Loom Over 2025 Copper Demand, Prices}