Copper: the economy’s nerves. Pricing & supply chain.

The world is hungry for copper.

By 2035, demand will double to nearly 50 million tonnes - there will be more copper produced in the next 25 years than in the last 5,000 years

Copper is abundant—but hard to mine efficiently.

On top of that, smelters are struggling as refining charges plunge.

The pressure is mounting. Demand is rising.

Can we keep up? Let’s find out.

What is copper?

Copper – with its essential role in wiring, infrastructure, and industrial systems – is often called “Dr. Copper.” The nickname reflects its ability to gauge the economy’s pulse. When industries thrive, copper prices surge. When growth stalls, they fall. Its widespread use makes it a clear indicator of industrial demand, giving copper a status that goes beyond that of just another raw material—it’s the go-to indicator of global economic health.

Why it's critical?

Just as copper powers electric grids, it drives the EU’s green ambitions. Demand is rising fast with wind farms, electric vehicles, and AI infrastructures leading the charge. A single wind turbine needs 29 tonnes of copper; every megawatt requires eight tonnes for cabling alone.

Copper’s supply is fragile. While it’s not listed as a critical raw material (CRM) due to a broad supplier base, that foundation is weakening. Poland, the EU’s biggest producer, provides just 2% of global output, leaving Europe vulnerable to disruptions. Recycling offers some relief, but it won’t cover the shortfall. At the same time, smelters are barely hanging on as refining charges drop, adding strain to an already stretched supply chain.

Key uses in the EU:

Copper keeps Europe running—and humming. Whether it’s moving electricity, powering electric cars, or keeping homes warm, copper is everywhere.

• Buildings & Industry: 20% of EU copper is in wiring, motors, and heating systems. Basically, if it turns on or heats up, copper’s in the mix.
• Electricity Systems: 45% goes into renewable power and grids—solar panels, wind turbines, and cables.
• Transport: 25% ends up in electric vehicles and railways. With EVs needing 80 kg of copper each, it’s fair to say copper is the new engine oil.

Telecom & Electronics: 10% supports Europe’s digital life, from data centers to smartphones.

Where does copper come from?

While Europe mines some copper—mostly from Poland and Sweden—it produces just 5% of the world’s supply.?

Chile, Peru, and China control over 40% of global production. Chile alone pumps out 28%, making it the kingpin of copper mining.

China doesn’t just mine copper—it refines it, too. With a stranglehold on smelting, China processes more copper than anyone, making it the key link in the supply chain. If copper is flowing through your wires, odds are good it spent some time in a Chinese smelter?.

And Europe??

While copper scrap recycling helps meet 55% of demand, the EU remains highly dependent on imported copper, mostly from South America and Africa. Despite local mines and refineries, Europe still has to play the import game to keep up with rising demand for electric cars, renewable energy, and grid upgrades.

How is copper mined?

Copper mining follows two main approaches: open-pit mining and underground mining. Each suits different types of deposits, and both come with unique challenges.

Open-pit mining

Open-pit mining targets copper deposits near the surface. Massive machinery strips away layers of earth, blasts the ore, and hauls it away. It’s a fast and efficient method, common in places like Chile, where the Escondida mine produces a significant share of the world’s copper. However, it leaves behind enormous scars in the landscape, raising environmental concerns.

Underground mining

When copper ore lies deep underground, miners go below the surface. Methods like room-and-pillar or block caving are used in mines such as Poland’s Lubin or Sweden’s Garpenberg. While underground mining disrupts less land on the surface, it’s more expensive and complex, requiring precise planning to extract ore from narrow veins without causing collapses.

How is copper processed?

After mining, the raw ore (typically containing 0.5% to 1% copper) is crushed and ground into fine powder. The copper is separated from waste rock using froth flotation, creating a copper concentrate with 20-30% copper content.

Concentrate goes to a smelter, where it’s heated to separate copper from impurities. The molten copper, called blister copper (about 99% pure), is then cast into anodes. These anodes undergo electrorefining, where an electric current pulls out impurities, leaving 99.99% pure copper—the standard for commercial use.

Forms of processed copper

1. Copper concentrate. Contains 20-30% copper. Intermediate product shipped from mines to smelters for refining.

2. Blister Copper. 99% pure. Result of initial smelting, used for electrorefining.

3. Refined Copper (Cathodes): 99.99% pure. Final product from electrorefining, ready for wiring, tubing, and electronics.

4. Copper Rods and Sheets: Made from refined copper for use in cables, appliances, and industrial machinery.

5. Alloys: Copper is combined with zinc (to form brass) or tin (for bronze) for specific industrial applications like plumbing and musical instruments.

Copper supply chain

Europe’s copper supply relies heavily on imports and recycling. Recycled copper covers 55% of demand, but the remaining 45% must come from imported concentrate, primarily from South America and Africa. In 2024, global copper production is projected to reach 324,000 tonnes, but disruptions from mining slowdowns, including in Peru and Panama, are already tightening supply.

Smelters play a critical role in refining concentrate into usable copper, but plummeting treatment and refining charges (TC/RCs) are making their operations unsustainable. As of early 2024, TC/RCs have dropped by 52.9% to $22.70 per tonne and 2.70 cents per pound, near historic lows. With refining margins this slim, many smelters are reducing capacity or planning maintenance shutdowns to survive.

Meanwhile, competition for concentrate is intensifying. New smelters coming online in Indonesia, India, and the Democratic Republic of Congo are adding over 3 million tonnes per year of refining capacity by 2026. For every tonne of new refining capacity, four tonnes of concentrate are needed, further straining supply chains already under pressure.

Without enough concentrate, Europe’s smelters—and the entire supply chain—are at risk.

How is copper pricing formed?

Copper pricing starts with the metal’s base value, pegged to the London Metal Exchange (LME) price for Grade A copper. But what miners take home isn’t as simple as the LME quote. Negotiations with smelters add layers of complexity—fees, deductions, and by-product credits shape the final payout.

Smelters charge treatment and refining fees (TC/RCs) to process copper concentrate into metal. These fees, revised annually, typically hover around 4.5 cents per pound and $45 per dry metric tonne (DMT). But in 2024, charges dropped to historic lows, cutting into smelters’ margins and leaving some operations teetering on the edge. Lower TC/RCs mean miners benefit, but without enough smelters to process concentrate, bottlenecks loom.

Smelters usually pay for 96.65% of the copper extracted from concentrate, with a small cut for impurities. For a concentrate containing 30% copper, the payout looks something like:

30% × 96.65% × LME Price

By-products like gold and silver sweeten the deal for miners, while impurities such as arsenic trigger penalties. Price participation clauses—once common—used to let smelters boost fees when copper prices surged, but these have become rare in recent years.

Price Participation Clauses:

Historically, long-term contracts included clauses that allowed smelters to increase refining charges when copper prices surged above certain thresholds, though these clauses have become less common in recent years.

Copper price in 2024

Copper hit $11,000 a ton, driven by bets on shortages and rising demand from EVs and renewables. Futures surged on the LME, climbing more than 25% this year, as smelters warned of production cuts amid tight ore supplies. A short squeeze on New York’s Comex forced shipments to the U.S., reducing availability elsewhere.

China’s inventories stay high, with weak industrial activity adding doubts. While prices rise, the gap between market hype and real demand leaves the rally on shaky ground.

What’s next for copper?

Demand for copper is set to double by 2035, driven by the rise of electric vehicles, renewable energy projects, and infrastructure upgrades. New players in Africa and Southeast Asia are adding capacity, but competition for concentrate is getting fiercer as established producers face dwindling ore grades. Europe’s reliance on imports and China’s grip on refining means any disruption could send prices soaring.