The Looming Cliff

The numbers don’t lie. According to reports from Goldman Sachs, Citibank, and Trafigura, the copper market is heading towards a “structural deficit” of over 5 million tonnes by 2030.

Why Can’t We Just Mine More?

1. Grade Decline: We have mined all the easy, high-grade fruit. The average ore grade in Chile has dropped from ~1.2% in 2005 to under 0.6% today. You need to crush twice as much rock to get the same amount of metal.
2. Water Scarcity: Mining uses gigalitres of water. Chile is in a mega-drought. Desalination plants are expensive and energy-intensive.
3. The “NIMBY” Problem: No one wants a mega-mine in their backyard (Not In My Back Yard). Permitting in the US and Europe takes decades.

The Price Implication

When demand is inelastic (we need it for electricity) and supply is constrained, price is the only release valve. Analysts argue that copper needs to hit $15,000/tonne (approx $6.80/lb) to incentivize the development of low-grade, difficult deposits in risky jurisdictions.

If we are at $9,500/tonne now, that implies a 50%+ upside just to reach equilibrium.