Copper supply squeeze may stay structural, Goldman says

That is why the usual commodity cycle playbook may not work. In most markets, higher prices eventually trigger more supply; in copper, Goldman argues the adjustment has to come mainly through price because the projects that can add meaningful tonnage are difficult, expensive and slow to replace. The bank said major discoveries have been falling since the 1990s, ore grades have deteriorated, particularly in South America, and new deposits are increasingly remote, lifting construction, operating and capital costs.

Goldman estimated capital intensity rises by about 50% between the pre-feasibility stage and first production, from $10,600 a tonne to $15,900 a tonne, and said its own project-level cost estimates are 25% to 90% above company studies. That gap highlights why even a strong copper price may not be enough to unlock a wave of supply within a typical investment horizon. It also helps explain why the sector has been re-rated: scarce, scalable copper assets are becoming more valuable precisely because they are hard to build.

The bank pointed to copper growth projects that could together add about $20 billion in net asset value and 1 million tonnes a year of production by late 2035. But that is a long-dated contribution, not a near-term fix. The practical implication is that miners with existing production, long reserve lives and credible expansion pipelines are likely to command a premium, while juniors and developers face a tougher financing environment and higher execution risk.

For investors, the story is less about a one-day move in copper and more about the earnings power of producers such as Freeport-McMoRan, Southern Copper and Teck Resources if the market continues to price in scarcity. Their shares have already reflected that theme in bursts this year, even as recent trading in the metal itself has been choppy amid weaker risk appetite and mixed demand signals. The wider backdrop remains supportive for the long term: the industry has warned that hundreds of billions of dollars in mine investment will be needed over coming decades to avoid shortages.

The key question now is whether capital is willing to fund that gap at a pace that offsets falling grades and aging mines. If it does not, copper prices will have to do more of the balancing, and the market may increasingly reward producers with the assets already in the ground rather than those still waiting to be built.