American Tungsten Corp. (TSXV: TUNG, OTCQB: DEMRF)
Building America’s Defense Critical Metals Supply
As energy security returns to the forefront and soaring metal production costs trigger supply concerns, asset management firm Sprott believes that rising demand for electrification driven by the energy transition, supply-side constraints caused by a sulfuric acid shortage, and cost increases stemming from geopolitical conflicts together form a structurally bullish case for the copper market. Copper is shifting from a traditional economic cycle indicator to a strategic resource, and copper mining companies, supported by strong profitability and relatively lagging market valuations, are well positioned to benefit from future market trends.
A key catalyst is the accelerating global shift toward alternative energy sources amid persistent disruptions in oil and gas supply. Given copper’s indispensable role in power generation, transmission, and energy storage, the metal stands to gain significantly.
Demand growth from data center infrastructure and the energy transition is expected to outpace that from core economic uses by a substantial margin. White forecasts that by 2040, these strategic sectors could account for 45% of total copper demand, up from 32% in 2024. He emphasizes that such demand is far less price-sensitive than traditional cyclical consumption, and grid modernization will not stall due to rising commodity prices.
Supply-side catalysts are also present. Sprott reports that approximately one-fifth of global copper production uses solvent extraction-electrowinning (SX-EW), a process that requires sulfuric acid as a feedstock, making a severe shortage of sulfuric acid a direct threat to copper output.
Sprott estimates that about 4.8 million tonnes of global copper supply are produced via the SX-EW process, structurally dependent on sulfuric acid availability. However, the closure of the Strait of Hormuz has severely affected sulfur-dependent copper producers. According to the International Fertilizer Association, upstream countries of the strait account for approximately 49% of global sulfur trade. Since the conflict began, sulfuric acid prices have nearly doubled.
Sprott warns that the impact on production will materialize over months, not weeks. While existing sulfuric acid inventories and in-transit cargoes provide short-term buffers for copper producers, the immediate effect is rising costs rather than production halts. The net effect is favorable for copper mining companies.
Copper mining company stocks rose 7.98% in April, outperforming copper metal itself and many other asset classes. Sprott notes that significant increases in other input costs, such as diesel, will not fundamentally challenge the economics of most global copper mines. At current spot prices of $13,000 per tonne, operating costs at nearly all copper mines worldwide are below all-in sustaining costs, meaning virtually all mines remain profitable.
The confluence of demand- and supply-side drivers, amplified by the impact of the Middle East conflict, will shape copper price trends in the coming months. The structural investment case for copper remains solid. On this basis, Sprott maintains a bullish outlook on copper mining equities.
