Copper Prices Hit Record as Demand Surges Beyond EVs
Copper prices have reached record territory, and the metal's popularity is growing due to its increasing demand in various sectors such as electric vehicles (EVs), renewable energy, and power grids. The shift away from iron ore towards copper by major Australian miners has been rapid, with BHP now accounting for 54% of its underlying earnings at margins around 70%. Despite producing about 3% less copper over the year, BHP's revenues have increased due to higher prices.
The supply chain is struggling to keep up with demand, as it can take 10-15 years to bring a new major copper mine online. Ore grades in major producing regions are deteriorating, forcing miners to move more rock to produce the same amount of metal. This 'squeeze' between accelerating demand and sluggish supply has led BHP to invest billions in expanding copper production across Olympic Dam and South America.
Rio Tinto is also investing heavily in copper, with plans to develop Oyu Tolgoi and implement technology to economically recover lower-grade copper. The rally in copper prices is not just driven by economic growth but also by the increasing demand for grids, electrification, and AI infrastructure. As a result, miners are being asked to consider what they will be 'digging out of the ground' over the next decade.