Copper Supercycle Looms as World Struggles to Meet Growing Demand

Copper's growing importance in a changing world has Saxo analysts looking at another potential commodity supercycle. A supercycle is a prolonged period of rising prices and demand for a particular resource, typically driven by structural factors such as population growth, urbanisation, and technological advancements. In this case, copper's role in the transition to renewable energy and electrification makes it an essential component of the global economy.

Friedland, founder of Ivanhoe Mines, estimates that humanity has mined roughly 700 million tonnes of copper throughout history. With a growing global population and increasing demand for electricity, he argues that the world may need to produce another 700 million tonnes during the next 18 years. This calculation excludes additional requirements from electrification, electric vehicles, and data centres.

One of the biggest structural problems facing the copper industry is declining ore grades. Many major copper mines were discovered decades ago, with operators exploiting the highest-quality sections first. As a result, grades are decreasing over time, making it more difficult to extract copper from rock. At Escondida in Chile, for example, grades have fallen from 2% to around 0.8%, and may decline further to 0.4%. This means that five times as much material must be processed to obtain the same amount of contained copper.

Friedland also highlights the importance of water and energy constraints in copper production. Many major deposits are situated in dry regions, requiring desalination infrastructure and energy-intensive pumping operations. He estimates that crushing and grinding rock across the mining industry already consumes around 4-5% of global energy production.