Renowned mining financier Robert Friedland recently stated that with the continuous growth in demand and the scarcity of copper mines, the physical market is on the verge of a crisis, making a substantial increase in copper prices necessary.
In the medium to long term, the trend of the supply-demand gap expanding remains unchanged. On the supply side, there is a lack of historical capital expenditure and new discoveries of large copper mines, while on the demand side, there are long-term boosts come from energy transition and the rise of emerging markets.
Although copper prices have recently retreated from their highs, institutions generally predict that as the supply-demand inflection point approaches, copper prices are poised to hit new highs.
According to Friedland, copper demand is “almost infinite.” He mentioned that if the global economy grows at a rate of 3% per year over the next twenty years, the demand for copper will exceed the total amount extracted in world history.
In addition to its well-known industrial uses, copper is crucial in emerging applications such as electric vehicles, artificial intelligence data centers, and modern warfare due to its electrical and thermal conductivity. He stated that in the coming years, the military demand for copper will grow infinitely, giving this metal “infinite value.” Copper plays a vital role in military equipment and technology, including communication devices, weapon manufacturing, power systems, and electronic warfare equipment.
On a more basic level, billions of people around the world hope to improve their quality of life with electric fans or air conditioners. Air conditioners alone require an “astronomical” amount of copper, which is also used in power generation and transmission to support these devices. He said, “There is no rational price for something you absolutely need.”
In terms of supplying copper and other raw materials, the United States lags far behind other countries, especially China. Raw materials are the foundation of economic development and technological progress. The energy to execute a single Google search is enough to light a 100-watt bulb for 10 seconds, while the energy consumed for one AI query can light the same bulb for 2 to 3 minutes.
In addition to supply security, copper production must also transition from “dirty energy,” such as coal, to clean energy, which is known as green copper. Correspondingly, green copper producers will enjoy higher stock premiums in the future.
American innovation can provide supply solutions. For example, the private company I-Pulse is collaborating with its partners— including Rio Tinto, BHP, Newmont, and Teck Resources— to develop and commercialize a technology that will make mineral exploration easier and significantly reduce mining energy consumption. Additionally, in May this year, Ivanhoe Energy announced its cooperation with BHP to use Typhoon technology for exploration in relevant areas of Arizona, New Mexico, and Utah.
