Legislating Demand

In the past, the free market decided how much copper to buy. Now, governments are forcing the issue.

The Inflation Reduction Act (USA)

Billions of dollars in tax credits for EVs and renewables have unleashed a wave of manufacturing in the US.

• Significance: It requires domestic or free-trade-partner sourcing of critical minerals. This puts a premium on copper from “friendly” jurisdictions (Canada, Chile, Australia).

The EU Green Deal / Critical Raw Materials Act

Europe is terrified of being dependent on China for batteries like it was dependent on Russia for gas.

• Goal: Source 10% of critical raw materials domestically by 2030.
• Reality: Europe has very few copper mines (KGHM in Poland being a notable exception). This means Europe must bid aggressively on the global market to secure supply, driving up prices.

Conclusion

Government policy has turned copper from a “cyclical” asset into a “strategic” asset.