Copper Supply Crunch Spurs AI-Driven Mining Boom
Copper prices have been steadily rising over the past two years, but it's not just about supply and demand. The real story is in the underlying arithmetic that shows copper's supply problem is structural, not cyclical.
Ross Givens, lead strategist at Traders Agency, views copper as a three-to-five-year position rather than a trade. He notes that NVIDIA has already become one of the most valuable companies in the world due to its role in the AI buildout, while the physical layer underneath it remains undervalued.
The numbers are staggering: miners have pulled roughly 700 million metric tons of copper out of the ground across all recorded history. However, industry estimates suggest that the world needs to mine another 700 million metric tons within about 22 years just to hold baseline growth, and this figure ignores electrification entirely.
Ore grades are working against this math, having fallen by roughly 40% globally since 1991. New mines take over a decade from discovery to production, which means that no amount of drilling can close the copper supply deficit in the short term.
The futures curve has inverted, signaling a physical copper shortage. Backwardation has steepened sharply across Western exchanges this year as traders rerouted metal into U.S. warehouses ahead of potential tariff uncertainty.