Copper CEO Projects Structural Deficit as Prices Hit Record Highs

Copper futures recently touched a record $6.87 per pound on the COMEX exchange, marking a 19% gain year-to-date, while London Metal Exchange prices reached $14,800 per metric ton. Charlie Cryer, chief executive of Oroco Resource Corp, asserts that these elevated prices reflect deep-seated structural imbalances rather than temporary market fluctuations.

The commodity’s price rally has been fueled by two primary narratives: the global shift toward electrification away from fossil fuels and the rapid expansion of artificial intelligence infrastructure. Data centers operated by major U.S. tech firms such as Amazon, Alphabet, SpaceX, and Meta require vast amounts of copper for power distribution, a material with no physical substitute.

Cryer emphasized that supply-side constraints are increasingly aggravating the deficit. Copper ore grades have declined globally as high-quality deposits become depleted, and few major discoveries exceeding 500,000 tons have emerged in recent years. Additionally, capital expenditure has stagnated while mining infrastructure ages, and the long development timeline of 15 to 20 years for new mines complicates rapid response to demand.

Compounding these challenges is a sulfur shortage linked to geopolitical transit risks via the Strait of Hormuz, which has reduced sulfuric acid production and impacted mining operations that rely on it. Consequently, global copper output has remained flat or declined.

Forecasts from Bernstein Private Wealth Management and S&P Global suggest a significant supply gap by 2040, with demand potentially reaching 42 million tons annually against a shortfall of up to 12 million tons. This deficit is expected to become pronounced after 2035.

Geopolitical tensions, particularly between the U.S. and China, have further fragmented resource markets, with many major deposits located in politically unstable regions such as the Democratic Republic of the Congo and parts of Latin America.

Industry consolidation appears likely as a result. Rio Tinto’s attempted merger with Glencore and Anglo American’s completed agreement with Teck signal a trend among major producers to secure assets. However, Cryer noted that large players often prefer acquiring projects only after feasibility and operational risks are mitigated.

Oroco Resource’s Santo Tomas project in Mexico, which holds approximately one billion tons of copper ore, is targeted to begin production in 2032. A pre-feasibility study is scheduled for release in 2027, which could enhance its appeal to potential acquirers. For long-term planning, Oroco employs a conservative copper price assumption of $4 per pound, acknowledging that factors such as tariff policies, Middle Eastern stability, or shifts in AI investment could trigger significant price volatility.