Copper Prices Poised to Surge: Historic Undervaluation Meets Explosive Demand from Electrification, AI, and Renewables

• Copper prices remain relatively steady despite decreased warehouse stocks in both London & Shanghai, with the International Copper Study Group forecasting potential surpluses despite production increases of 2.3-2.5% over the next couple of years.
• Global energy demand grew by 2.2% in 2024, with electricity demand surging by 4.3%, driven by record temperatures, increased electrification, and digitalization - all factors that support increased copper consumption.
• Chinese investment in overseas copper projects is directed to Chile, Peru and the Democratic Republic of Congo. Also Congo has now surpassed Chile as China's largest refined copper supplier.
• Chile, the world's largest copper producer, projects production to peak at 6 million tons in the next three years before declining, ultimately remaining flat over the next decade despite global copper demand growth.
• Junior mining companies with strong growth, momentum, and value propositions are attracting significant investment, with many major companies farming into promising copper projects globally to secure future supply.

Copper stands at a pivotal intersection of multiple global megatrends shaping the 21st century. As highlighted in Merlin Marr-Johnson's recent "Copper Bottomed" analysis, despite relatively stable prices, fundamental factors suggest copper may be positioned for significant growth. Copper has maintained a steady upward trajectory over the past 25 years, yet when measured against gold as a proxy for "real money," copper remains at historically low valuations. This presents a potential opportunity for investors willing to look beyond nominal price movements and consider copper's central role in the ongoing global energy transition, digitalization, and industrial development.

Megatrends Driving Copper Demand

Surging Global Energy & Electricity Demand

The International Energy Agency's Global Energy Review published in early 2025 reveals compelling data supporting copper's growth trajectory. Global energy demand grew by 2.2% in 2024, faster than the average rate over the past decade. More significantly, electricity demand surged by 4.3%, substantially outpacing the 3.2% growth in global GDP. This exceptional growth was driven by record temperatures, accelerating electrification, and digitalization.

This electricity demand growth directly translates to increased copper consumption. Unlike other commodities, copper's relationship with electrification is practically inevitable - every additional kilowatt-hour generated, transmitted, and consumed requires copper infrastructure. As Marr-Johnson notes, 

"The more that you go down the intermittent, disperse energy collection processes like solar and wind, the more transmission lines you have, the more electrical...the more copper you're going to need."

The data shows an unprecedented acceleration in electricity consumption, particularly in buildings. Marr-Johnson points to "a big spike in electricity demand in 2024" with buildings (accommodating AI infrastructure and air conditioning) showing dramatic growth, adding approximately "440 terawatt hours of electricity consumption." This represents a structural change in energy consumption patterns likely to persist long-term.

The EV Revolution Continues

Despite some slowdowns in certain markets, the electric vehicle sector continues to drive significant copper demand globally. China maintains strong growth in both battery and plug-in hybrid vehicles, Europe remains steady at over 3 million units sold, while the United States has reached over 1.6 million units and the rest of the world accounts for approximately 1.4 million units.

This trend is particularly important for copper investors since EVs use significantly more copper than conventional internal combustion engine vehicles. As battery technology improves and range anxiety diminishes, EV adoption is expected to accelerate, creating sustained demand for copper in automotive manufacturing.

Supply Constraints: The Other Side of the Copper Equation

Chile's Production Plateau

While demand factors present a compelling case, supply dynamics strengthen the investment thesis. Chile, the world's largest copper-producing country, faces significant production limitations. According to projections from Cochilco (the Chilean Copper Commission), Chilean copper production is expected to peak at 6 million tons in the next three years before declining to approximately 5.5 million tons over the subsequent seven years. Essentially, production from the world's copper leader will remain flat over the next decade.

This plateau comes despite substantial investment commitments. Mining company BHP alone has announced plans for between $11-15 billion worth of investment over the next decade, mostly concentrated on Escandida, one of the world's largest copper mines. Overall, projected capital expenditure for Chilean mining has reached $83 billion, with approximately 70-75% directed toward copper.

The fact that such massive investments will merely maintain rather than significantly expand production highlights the growing challenges in copper mining - lower grades, deeper deposits, and more complex metallurgy - all factors that support higher long-term copper prices.

Geopolitical Shifts: China's Strategic Positioning

China's strategic approach to securing copper resources represents another critical factor for investors to consider. According to analysis from Aid Data published in January 2025, Beijing has become "a major source of financing for projects around the globe that involve specific minerals" including copper, which are essential for the energy transition.

These investments are not evenly distributed and reflect strategic priorities. As of 2021, 46% of China's mineral investment has gone into copper projects, with particular focus on Peru and the Democratic Republic of Congo (DRC). The results of this strategy are already evident in trade flows: Reuters data shows the DRC has now overtaken Chile as China's largest refined copper supplier, marking a significant "switcheroo" in global copper trade patterns.

This strategic positioning by China may create additional supply constraints for Western markets and companies, potentially supporting higher prices in non-Chinese markets.

Merlin Marr-Johnson, CEO of Fitzroy Minerals

Market Dynamics and Investment Activity

Major Mining Company Investment Patterns

One of the most telling indicators of copper's investment potential is the behavior of major mining companies themselves. Marr-Johnson's presentation includes a comprehensive list of recent farming-in activity, showing major companies like Freeport, BHP, Mitsubishi, Barrick, Rio Tinto, South32, and Sumitomo making substantial investments in copper exploration and development projects globally.

These strategic investments by industry insiders with deep geological and market knowledge provide strong validation of copper's long-term prospects. As Marr-Johnson states, this activity demonstrates that "majors and mid-tier capital is hunting for potentially viable resources," with the goal of securing future supply.

Junior Mining Opportunities

For investors seeking higher-risk but potentially higher-reward exposure to copper, junior mining companies offer interesting possibilities. Johnson's analysis identifies several companies showing promising results:

1. ATEX Resources: With market capitalization growth from approximately $200-250 million to $568 million over 15 months and impressive drill results including 1.2 km at 0.91% copper equivalent, ATEX demonstrates strong discovery potential.
2. NGX Minerals: With a $2.5 billion market cap and exceptional grades (2.8%, 8%, and 2.9% copper over significant intervals), NGX represents a larger-scale development opportunity.
3. Dundee Precious Metals: A $3 billion producer with impressive results from their Serbian asset Čoka Rakita, showing 3% copper over 190m. The company is up 72% in one year and also has projects in Ecuador.
4. Firefly Metals: An Australian company with operations in Newfoundland focused on the old Rambler mine, Firefly shows promising drill results with grades of 5.7% copper and 2g gold over substantial thicknesses.
5. Hercules Metals: With a $152 million market cap and $15 million in cash, Hercules is down 24% in one year but has received new permits to drill promising targets in the United States.
6. Gladiator Metals: With a sub-$50 million market capitalization but impressive results of 3.6% copper over 26m and 7.54% copper over 11.52m at its White Horse Copper project, Gladiator demonstrates the value potential in smaller explorers.
7. Fitzroy Minerals: Up 50% in one year with a market capitalization of $37 million, Fitzroy's recent discovery hole at its Caballos project in Chile returned 200m of mineralization at 0.46% copper with 591 ppm molybdenum, opening a new 10km mineralized corridor.
8. Magna Mining: Up 70% this year with production beginning in March, Magna demonstrates a "bootstrap into production" model with a "can-do attitude."

Johnson emphasizes that successful junior companies typically demonstrate three key characteristics: growth (expanding resources), momentum (funded drilling programs and regular news flow), and value (reasonable valuation relative to resource potential).

Navigating Risks in Copper Investment

Geopolitical & Permitting Challenges

Investors must recognize the various challenges facing copper development globally. Regulatory and permitting issues represent significant hurdles in many jurisdictions. Marr-Johnson expresses skepticism about potential regulatory improvements in Canada, noting the influence of climate-focused officials like Mark Carney who may not prioritize mining development despite its essential role in energy transition materials.

Additionally, projects in countries like Ecuador, the Philippines, and Colombia often face specific challenges related to environmental regulations, community relations, and political stability. Even in mining-friendly jurisdictions like Chile, water access and environmental concerns have become increasingly important factors.

Price Volatility & Market Dynamics

While long-term fundamentals appear strong, copper remains subject to short-term volatility driven by macroeconomic factors, inventory levels, and speculative positioning. Marr-Johnson notes that LME (London Metal Exchange) and Shanghai inventory levels influence price movements, with declining warehouse stocks typically associated with price increases.

Interestingly, the International Copper Study Group actually forecasts potential surpluses in the coming years as refined production outpaces demand growth, despite global copper mine production only growing at 2.3-2.5%. This highlights the complex and sometimes contradictory nature of copper market forecasts.

Investment Approaches to Copper

Direct Equity Investments

For investors seeking direct exposure to copper, several approaches merit consideration:

1. Large Diversified Miners: Companies like BHP, Rio Tinto, and Freeport-McMoRan offer exposure to copper along with other commodities, providing some diversification benefits.
2. Pure-Play Copper Producers: Mid-tier producers focused primarily on copper may offer more direct exposure to copper price movements.
3. Development-Stage Companies: Companies with defined resources advancing toward production represent a middle ground between producers and explorers in terms of risk-reward.
4. Exploration Companies: Early-stage companies like those highlighted in Johnson's analysis offer the highest risk-reward profile, with potential for substantial returns upon significant discoveries.

Alternative Investment Vehicles

Beyond direct equity investments, investors might consider:

1. ETFs and Commodity Funds: Various exchange-traded funds provide exposure to copper prices or copper equities.
2. Futures and Options: More sophisticated investors may utilize derivatives to gain exposure or hedge existing positions.
3. Royalty and Streaming Companies: These provide exposure to copper production without direct operational risks.

The investment case for copper rests on a confluence of powerful long-term trends and supply constraints. The electrification of transportation, expansion of renewable energy, growth in artificial intelligence and data centers, and increasing electricity consumption in developing economies all point to sustained copper demand growth.

Meanwhile, production challenges, declining ore grades, and increasingly complex development environments suggest supply will struggle to keep pace. China's strategic positioning to secure copper resources adds another dimension to the supply equation for Western markets.

Marr-Johnson's assessment of copper pricing in "real money" terms (relative to gold) suggests copper may be undervalued relative to its fundamental importance in the global economy. For investors with appropriate risk tolerance and time horizons, copper exposure - whether through major producers, development companies, or carefully selected explorers - merits serious consideration as part of a forward-looking investment portfolio.

As global economies navigate the complex transition toward more electrified, digitalized futures, copper's role as the fundamental enabling metal for these transformations positions it uniquely among commodity investments. The metal that powered the industrial revolution may prove equally essential to the digital and renewable energy revolutions of the 21st century.