The Coming Copper Crunch

Copper Supply Lagging Behind Projected Demand

Chile is the world’s largest copper producer, with approximately 180 million tons, or 18% of the world’s reserves. Despite every indication of climbing demand, Chile appears unable to capitalize on it. The challenges facing the country are not geological, but economic. This past July, the country’s state-run company Codelco, one of the world’s largest mining companies, announced that it expects production to remain stagnant in the coming years. At Escondida, the world’s largest copper mine, production fell 3% in the latest financial year as concentrator feed grades (the average concentration of copper in the ore that is being fed into the concentrator, or processing plant) declined from 1.02% to 0.90%. At Pampa Norte, which includes the Spence mine, production fell 21% as operations moved into deeper and more complex geological deposits.

Declining ore grades and production shortfalls are common and mean that miners must process more rock to produce the same amount of copper, increasing the energy, capital, and infrastructure required to maintain production. Meanwhile, increasingly complex deposits can require mines to operate deeper underground and adopt more demanding extraction methods. Earlier this month, a catastrophic collapse and concerns about seismic instability forced Codelco to suspend an expansion project at the company’s El Teniente mine, which has operated for more than a century.

Copper is not easy to scale up quickly. It takes over 15 years to develop a new mine, and at a pretty penny. Large projects can require $30,000 to $40,000 per ton of annual production capacity. The challenge is how to meet demand when new supply cannot come online quickly enough. According to the International Energy Agency, copper supply faces a 25% deficit by 2035 as demand continues to grow.

In Chile, in addition to the geological challenges discussed above, some reticence to invest in copper development may also be due in part to the strength of the country’s lithium sector. Chile, Argentina and Bolivia have slightly over half of the world’s known lithium deposits, and the sector’s attractiveness may be diverting some of the investment money, resources, and attention needed to increase copper production.

In 2023, Chile’s leftist former President Gabriel Boric announced that while existing contracts would be honored, the state would take a stronger hand in the future development of the country’s lithium reserve. The news, and uncertainty about the new arrangements and the terms of the public-private partnerships the government was seeking, rattled the investment community. However, subsequent clarification of the public-private partnership model restored substantial commercial interest. Investment has continued, albeit under a more state-directed framework with greater regulatory complexity.

It remains to be seen how the presidential administration of José Antonio Kast, who took office in March 2026 and campaigned on a program that includes attracting more investment to the mining sector, reducing the regulatory and permitting burden, encouraging further exploration, facilitating small and medium-sized mining efforts, and improving the country’s water infrastructure will affect the viability of the Chilean mining sector overall, and copper in specific.

As Chile Cannot Meet the Growing Demand for Copper, Who Can?

With Chile likely unable to substantially increase production, other producers may be able to step up to help fill the gap. The Democratic Republic of Congo (DRC) and Zambia are two standout potential alternatives. The DRC holds about 10% of global copper reserves, while Zambia holds about 6%.

The DRC has already demonstrated its ability to increase production. Over the last year, the country increased its copper output by 10%, becoming the second-largest producer after Chile, surpassing countries like China and Peru. The country’s growing role in global copper supply has also attracted geopolitical competition.

The DRC, however, faces infrastructure constraints, governance issues, and exposure to geopolitical shocks that could subject it to supply chain delays. Less than 10% of the country’s roads are passable year-round, and frequent power shortages force mining companies to rely on diesel generators, increasing costs. Political risks abound too. The east is rife with armed militias and rebellion. While it has recently turned away from China’s Belt and Road Initiative towards the West, including signing a strategic minerals agreement with the U.S. as part of the peace process with Rwanda, the DRC is hardly politically stable.

Zambia has substantially more state capacity, infrastructure, and political stability. It aims to triple its output to 3 million metric tons annually. However, reaching that target will require substantial investment, particularly to address the country’s electricity shortages. Rising labor costs and pressure to increase wages could add further costs to expansion.

There is only one feasible way to increase copper production quickly in the DRC and Zambia: the Lobito Corridor. The Lobito Corridor is an economic artery comprised of ports, railways, processing facilities, and logistics hubs connecting the Angolan port of Lobito with the mineral-rich Katanga region of the DRC and northern Zambia. Although this project was originally a Biden Administration initiative, it has continuing bipartisan support, and the U.S. confirmed its commitment to providing the $550-million loan needed to continue development in 2025.

Is Copper Becoming a Geopolitical Asset?

As copper supply becomes harder to develop, securing access to producers is becoming necessary. China already has a strong foothold in the DRC’s copper industry, including through major investments such as the $1.08 billion expansion of the KFM copper mine and operations across several projects in the country. The United States, meanwhile, is seeking to secure greater access to critical minerals as Washington and Beijing compete for control of supply chains. Under the U.S.-DRC Strategic Partnership Agreement, the DRC plans to increase copper exports to the United States to up to 500,000 tons annually.

Now the challenge is not only producing enough copper but determining where and how that copper is sold. China has historically been Chile’s largest market for copper, leaving the world’s largest copper producer heavily exposed to Chinese demand. Chile has begun seeking diversification, whilst also aiming to shift away from exporting copper concentrate toward refined copper. On August 10^th, Reuters reported on ongoing discussions between Chile’s Codelco and India’s Hindustan Copper toward a joint venture.

Chile, Zambia, and the DRC demonstrate that the world’s copper problem is not simply one of scarcity, but one of access. Copper is available, but its extraction is becoming more expensive and difficult. As demand continues to grow, those countries capable of increasing production will become increasingly important. For producers, copper will not merely be a commodity, but a strategic resource. For investors, the question will not be which countries possess copper reserves, but who can turn those reserves into reliable production at a scale and speed capable of meeting demand.