Copper wired into great power rivalry

Two critical technologies, AI and electric mobility, are driving a multi-year surge in copper prices, while supply has not kept pace. The world is yet to experience a full rollout of either tech, which makes copper a critical mineral for the future. AI data centres need enormous amounts of copper wiring, and EVs use several times more copper than cars running on fuel. The tech race in both areas pits the US against China for strategic control of overseas copper mines. Some of the largest mines have had to scale back production for various reasons, including disasters and industrial action. Although copper prices have been climbing, they have not reached levels sufficient to trigger capacity expansion, and supply is driven by the overexploitation of existing mines. This aside, copper is rising alongside gold and silver, as safe-haven demand is gaining strength on heightened geopolitical uncertainty.

The Venezuela incident reinforces concerns over strategic control over minerals and the security of supply chains. Copper is vital for national security, and the US is aiming to ramp up production at home. China, which dominates the copper refining industry, has cast its net wider for supplies from Africa and South America. India is also in the race to secure supplies from domestic and foreign sources. Copper supplies are concentrated in a select group of countries - Chile, Peru, Zambia and the Democratic Republic of Congo - where resource nationalism and social risks are mounting. Smelting copper is principally located in China, making other consumer states structurally dependent.

The metal, thus, finds itself caught up in a great power rivalry. Like oil, copper needs a contract between a handful of producing and consuming nations. This becomes clearer as mining the metal becomes more difficult, both naturally and politically. The supply response will improve through better-coordinated demand. Trade fragmentation makes this a remote prospect for copper. The metal's credentials for greening the planet call for scrutiny of the environmental impact of over-mining.