Why a copper crunch is looming

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published 29 November 2025

You can’t blame BHP for having another crack at buying Anglo American, but its decision to walk away again so quickly raises big questions. It is widely acknowledged that there is a looming supply shortfall for copper, the metal at the heart both of a putative BHP-Anglo deal and of the much better Anglo-Teck Resources merger that investors prefer. Yet BHP and its peers remain reluctant to put up serious money to solve that.

The copper bull case is simple. The world is using more electricity: it is replacing fossil fuels (eg, electric cars), it is meeting new demand (eg, emerging markets) and – at the margin – it is critical to new technologies (eg, data centres are a small but fast-growing share of consumption).

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Can copper supply keep up with rising demand?

Copper supply is not on track to keep up with this. Total demand will grow by roughly 24% to almost 43 million tonnes per annum (mtpa) by 2035, reckon analysts at Wood Mackenzie. Meeting it will require eight mtpa of new mined supply and 3.5 mtpa of additional scrap supply. There is no shortage of copper reserves around the world to mine, although ore grades have been dropping over the long term (this means more rock must be mined to produce the same amount of metal, pushing up costs). However, there has been a lack of investment in major new mines. Meeting demand will now take over $210 billion in investment, says Wood Mackenzie. This is a huge increase from the $76 billion invested in the past six years, and about half of that came from Chinese miners, which adds a further wrinkle. Securing copper supplies may become a geopolitical imperative.

There may already be hints of tightness in the market, with prices reaching record highs. Steady demand growth has combined with supply disruptions at mines in Chile, the Democratic Republic of Congo and Indonesia to create a probable mined supply deficit by next year. However, there are other factors at play as well. The threat of tariffs on refined copper imports pushed US prices to a premium, causing metal to be stockpiled there and shrinking stocks elsewhere in the world. If demand forecasts are correct, the fundamental crunch is yet to come.

Some substitution is possible. Aluminium has lower conductivity and is less durable, but works well for some power applications. Fibre-optic cable has replaced copper for data transmission. More speculatively, carbon nanotubes may eventually offer another alternative. Still, for the most part, copper will be crucial for the foreseeable future. A basket of some of the most pure-play copper miners – eg, Anglo-Teck, Freeport McMoRan, First Quantum Minerals, Antofagasta, Southern Cooper – is one of the most compelling ideas in natural resources.

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Cris Sholto Heaton is an investment analyst and writer who has been contributing to MoneyWeek since 2006 and was managing editor of the magazine between 2016 and 2018. He is especially interested in international investing, believing many investors still focus too much on their home markets and that it pays to take advantage of all the opportunities the world offers. He often writes about Asian equities, international income and global asset allocation.

Cris began his career in financial services consultancy at PwC and Lane Clark & Peacock, before an abrupt change of direction into oil, gas and energy at Petroleum Economist and Platts and subsequently into investment research and writing. In addition to his articles for MoneyWeek, he also works with a number of asset managers, consultancies and financial information providers.

He holds the Chartered Financial Analyst designation and the Investment Management Certificate, as well as degrees in finance and mathematics. He has also studied acting, film-making and photography, and strongly suspects that an awareness of what makes a compelling story is just as important for understanding markets as any amount of qualifications.