Copper's Broken Supply Chain Can't Keep Up with Record Mining Profits

Rio Tinto's copper division saw an 84% surge in EBITDA to $5.7 billion, contributing significantly to the company's record mining profits of $6.85 billion for the six months through June.

This is a notable increase from a year earlier and has helped push Rio Tinto's stock up 14.51% year-to-date, outperforming the Global X Copper Miners ETF (NYSE:COPX), which is up 6.59% in the same period.

According to CEO Simon Trott, the 'step-change in performance' can be attributed to higher commodity prices, increased copper output, and productivity gains, as well as growing demand for copper and lithium in data centers and grid storage batteries.

However, the industry's longer-term supply response is a concern. The International Energy Agency (IEA) has revised its projected 2035 copper supply gap to 25% from around 30%, but this improvement comes primarily from extensions and expansions of existing operations rather than new discoveries.

The IEA's Global Critical Minerals Outlook 2026 also highlights the bottleneck in smelting capacity, with China controlling roughly half of the market and many smelters outside China operating at below 70% capacity. This has led to a narrowing route for metal production to reach the market.