Get ready to enter the copper age

We may be entering our second Copper Age – the first one, the Chalcolithic (copper+stone) Age, spanning 6,000 to 4,000 years ago, being the period when humans first used metal. This time around, AI, automation and energy transition, with copper at their core, is driving up demand. The world will have to mine more of the metal now than it has in its entire history. China, which is at the forefront on all three technological revolutions, accounts for well over half of global copper imports, and its stockpiles have a bearing on record prices reached earlier this year. A rare surge in Chinese exports has confounded commentary of a structural bull market in copper. A short squeeze in the US allowed the Chinese an export window. China‘s dependence on the Democratic Republic of Congo for its copper imports frees up the other top producers, Peru and Chile, to supply to the rest of the world. New mines are being developed in South America and Africa. But supply is likely to trail industrial demand for better part of this decade.

China’s demand weakness is largely episodic. It hasn’t fallen off the cliff even with slow growth and a property market bust. It has the biggest energy transition requirement on the planet, even as it holds on to its position as the world’s biggest, not sole, factory.

Copper demand, relative to iron, provides a marker for value addition in manufacturing – and for a country like India that aims to climb the value chain by importing over 90% of the metal. As demand from EVs and server farms mounts, India will need to secure steady copper imports. It is exploring buying copper assets in Chile, the world’s largest producer. It is also scouting around for lithium in South America and Australia, and for copper in Africa. India needs to move fast in securing mineral supplies given the scale of its energy transition, as well as the defined window to offer global manufacturers a China+1 destination. But it’s entering the race late after the era of cheap copper mining is over. Better late copper than never.