Copper Supply Crunch Drives Record Prices Amidst Weakening Mine Output

Copper prices have hit record highs this week, with three-month metal on the London Metal Exchange (LME) reaching $14,779 a ton and New York futures crossing $3.74 a pound.

According to Frank Holmes, chief investment officer of U.S. Global Investors (NASDAQ:GROW), the market's signal is not just about tariff speculation but rather a deeper structural problem - weakening global mine output and growing difficulty in bringing new deposits into production.

The International Copper Study Group (ICSG) reports that global mine production fell 1.1% in the first half of 2026, with output dropping in Chile, Indonesia, and the Democratic Republic of Congo, three of the largest producers on earth.

Chile's second quarter was its weakest in at least 19 years, and Codelco and Freeport-McMoRan both reported double-digit production declines. Morgan Stanley (NYSE:MS) now projects mine supply to run flat or slightly lower this year, marking the first annual decline since 2017.

The industry has found fewer copper deposits in recent years, with S&P Global Market Intelligence tracking major discoveries back to 1990 showing that only 263 have been made, holding about 1.4 billion tons of copper. This is a concern because demand for copper is set to rise alongside the expansion of AI data centers and electricity infrastructure.