Why Copper Demand Keeps Doubling
Most estimates will put the market into a supply deficit beginning sometime in late 2025 out through 2027. That tends to be the window that most are pointing to. A lot can change. The copper market tends to have a lot of supply disruptions. On average, it's about 5% a year that we see from supply disruptions.
Cadelco, which is the Chilean state producer of copper, actually has their largest mine, which suffered a partial collapse about a week and a half ago. So, they're still working to bring that online. That's just one example that we see as disruptions happen. But typically, when you look at the broader copper market, about every 25 years or so, as economies are advancing, we see about a doubling for copper demand.
We're starting to see that now as you have developing countries increasing their standard of living. Developed countries are having technological advancements which includes things like AI and electrification. So that's really providing this backdrop of increased demand, but we are seeing some headwinds as it relates to supplying more copper.
First, one of those would be declining ore grades as much of the easy to access copper has already been mined out. So that means miners have to extend the life of existing mines and move more dirt in order to bring more ore out of the ground. We're also seeing the long lead times to bring a new mine on and operational from once it's discovered.
On average in the United States it can take about 29 years from discovery to production. We see large producing countries like Canada where it can take about 27 years. Chile, which is the largest producer in the world, they actually take about 22 years. So significant lead times.
We think that relaxing the permitting process could go a long way to help bring new supply online. But we do expect to see as we move through the coming years a structural supply deficit out into the foreseeable future once we get past these next couple of years.
