How copper companies can drive value amid accelerating energy transition

With supply pressures intensifying, copper companies are ramping up production, embracing sustainability and leveraging digital innovations.

In brief

• Copper companies are prioritizing exploration and expansion to bridge the looming supply gap and capitalize on a bullish long-term demand outlook.
• Sustainability and responsible mining practices are at the forefront of miners’ strategic initiatives.
• Copper companies are embracing circular economy principles and leveraging digital innovations to drive long-term value.

Copper, the cornerstone of modern infrastructure and a key driver of the energy transition, is at the heart of the journey toward a greener future. Meeting the world's electrification goals will require 115% more copper to be mined over the next 30 years than has been mined throughout history.ⁱ The strategic importance of copper is also growing with its use in artificial intelligence-driven data centers and defense systems, adding an extra layer of demand.

The copper market is tight, with deficits expected to worsen after 2025 due to scarce new production. Copper metals and minerals companies are adjusting strategies, focusing capital on copper-rich areas like Latin America and investing in technologies such as AI and sulphide leaching to boost output. Exploration spending reached a decade high in 2024; however, the sector faces long-term supply issues due to a lack of new discoveries, longer development times, declining ore quality and the average discovery cost now being four times what it was two decades ago.

Sustainability imperatives remain at the forefront of mining companies’ agendas. From ambitious decarbonization targets to advancing water stewardship, enhancing workforce safety and promoting diversity, mining companies are innovating to meet stakeholder expectations. By integrating circular economy principles and deploying advanced technologies, companies aim to drive discoveries, improve recovery rates and optimize operational efficiency.

Copper exploration and expansion budgets rise to the highest levels in over a decade with a focus on older, known deposits

Copper exploration budgets are estimated to increase 2% year over year, reaching US$3.2b in 2024, the highest since 2013. Latin America remains the dominant region, accounting for 44% of the global budget, led by Chile at 20% despite a 6% year over year decline. Argentina’s budget is estimated to nearly double to US$200m.ⁱⁱ In North America, the exploration budget surged, with the US budget more than doubling to US$456m and Canada’s tripling to US$336m over the past decade, highlighting strong regional momentum.

Minesite exploration dominates 39% of the world's copper budgets, with major activity in Canada and Chile. However, grassroots exploration budgets have plunged by 9% to US$786m, now just a quarter of global copper exploration efforts. The stark decline from 2015's 40% share marks a strategic pivot to proven reserves, potentially threating the future copper supply pipeline.

Despite increased investments, the sector continues to grapple with a decline in major discoveries, with just 4.2 metric tons (mt) of copper found in four major deposits since 2019, underscoring the necessity for technological innovations and faster permitting processes to unlock new resources.

In Chile, addressing these bottlenecks has become a key priority. Following the introduction of the royalty bill, a working group identified areas with the longest permit processing times and produced a roadmap to expedite these processes. The government has committed to reducing lead times for permitting by 30%, a move that aims to foster a more responsive regulatory environment and facilitate timely project development.ⁱⁱⁱ

M&A deals continue as companies look to secure copper production

In 2024, the copper sector saw a slight increase in deal count, rising from 36 in 2023 to 38. However, the total deal value declined by 34%, dropping to US$7.7b.^iv Despite this, M&A continues to play a crucial role in expanding footprints, particularly in copper-rich regions, as companies strive to boost production capacity in the face of a lack of major new discoveries, despite strong exploration budgets.

The Americas, especially Chile, Peru and Canada, continue to be a key hotspot for copper M&A, driven by rich mineral deposits and strategic growth opportunities. Recently, three major deals worth a combined US$3.5b were signed to bolster copper production, optimize shared infrastructure and unlock operational efficiencies, driving economies of scale.

Copper companies are refining portfolios to focus on core assets while forming strategic partnerships. Vale's sale of a 10% stake in its Base Metals division to Manara Minerals highlights the sector's shift toward prioritizing core copper projects for reinvestment and long-term growth.^v

Rising regulatory and geopolitical uncertainty is impacting the supply-demand and trade dynamics

a) Argentina’s regulatory changes aim to support copper output

Argentina is positioning itself as a significant player in the copper landscape through policy reforms and global shifts. The country has lifted export restrictions on scrap metal and introduced the Regime for Large Investments (RIGI) program, which provides incentives like tax credits and reduced duties to draw investments, targeting the country’s potential of 1.2mt copper output by 2030. The government is also easing environmental rules to boost economic growth and trade.

b) Recent policy changes in the US and Canada are reshaping copper trade and supply chains

In the US, the new administration aims to expand tariffs and reshore critical supply chains and manufacturing production. Proposed tariffs on Chinese imports and a 25% tariff on copper imports from Canada and Mexico could impact trade flows, pricing and metal availability, potentially triggering reciprocal tariffs on US exports.^vi

Permitting processes in the US involving multiple agencies could be streamlined by adopting practices like those in Canada and Australia. The new administration faces the decision to greenlight the Resolution Copper project in Arizona, potentially North America's largest copper mine with an estimated 0.5mt annual production.

Canada recently imposed a 100% tariff on Chinese-made electric vehicles (EVs), aiming to potentially drive demand for domestically sourced copper to support EV production. However, these policies also pose risks, such as fluctuations in copper prices and barriers to foreign investments in mining.

Companies to focus on ESG initiatives to achieve sustainable operations

a) With a 40% water deficit projected by 2030, companies are leading efforts in innovation and collaboration to ensure sustainable water management^vii

The copper sector in Chile is proactively addressing the issue of water scarcity, as 93% of its mines are in arid regions and water supplies are projected to halve by 2060.^viii Companies are turning to desalination, wastewater treatment and water-saving technologies to lessen freshwater reliance.

Emerging policy frameworks are conditioning public investments on responsible water stewardship, necessitating transparent engagement with Indigenous communities. Chilean Indigenous associations are now establishing an environmental unit comprised of hydrogeologists to assess and legally address mining impacts on water resources.^ix

b) Copper producers are advancing gender diversity to drive operational excellence and sustainability

Metals and minerals companies are recognizing the value of female inclusion in leadership and operational roles, linking it to gains in productivity, safety and sustainability. Firms with more women on their boards tend to score higher on ESG metrics, reduce emissions effectively, invest more in renewables and prioritize environmental stewardship.

However, with women holding just 11.2% of leadership positions in Latin America's M&M sector, there is room for improvement.^x Strategies like addressing pay disparities, offering flexible work arrangements and encouraging STEM education. The copper sector’s next step is to integrate women at all levels, setting a standard for inclusivity and progress.

c) Electrification of mining operations and supplier emission reduction strategies remains a key focus area for copper companies

The copper sector is embracing electrification and supplier-focused emission reduction strategies to align with global decarbonization goals. With diesel consumption in mobile fleets accounting for over 90% of Scope 1 emissions in surface mines, miners are actively adopting innovative solutions such as battery-swapping technology for electric trucks and hydrogen-powered locomotive to reduce emissions while improving operational efficiency.

Increased scrutiny on safety practices demands proactive action from copper companies

Operational safety remains a critical focus, with conveyor-related injuries and fatalities highlighting the need for proactive maintenance and monitoring.^xi The adoption of automation and digital technologies is transforming mining operations, enhancing efficiency and safety. For instance, Mopani Copper Mines’ Mine of the Future program is leveraging real-time tracking and 3D visualization to bolster emergency response and proximity awareness to reduce safety incidents.^xii Such initiatives are essential investments for reducing safety risks and optimizing productivity in high-risk operations.

d) The new version of the Copper Mark Risk Readiness Assessment is accelerating the adoption of responsible production

The Copper Mark continues to play a pivotal role in promoting sustainability within the copper sector through its assurance framework, emphasizing responsible production practices by measuring and reporting on sustainability metrics and KPIs. In 2024, members of the Copper Mark implemented a new version of the Risk Readiness Assessment, consisting of 33 criteria for responsible production, sourcing, processing and recycling of minerals.

The Copper Mark Risk Readiness Assessment Criteria

Source: The Copper Mark

The Copper Mark introduced an updated Theory of Change, following extensive consultation with stakeholders, integrating critical issues of copper identified by the Impact Working Group. The newly integrated focus areas include local community engagement, greenhouse gas emissions reduction, biodiversity and water stewardship.^xiii

Currently, more than one-third of the world’s mined copper comes from sites that have the Copper Mark accreditation.

What will drive business resilience beyond?

Integrating recycling into the mining operating model will lead the way in building a circular economy

Copper has one of the highest recycling rates compared to other metals, with recycled copper accounting for 32% (8.7mt per year) of the world’s copper supply in 2023. Significant recycling potential lies in electronic waste, the fastest-growing waste stream globally at 62mt per year. Mining companies are increasingly collaborating with cleantech companies to use high-quality copper, which is extracted and processed from recycled electronic scrap to drive copper circularity.

The reprocessing of tailings and implementing closed-loop systems are gaining traction, enabling the extraction of valuable resources while minimizing waste and emissions. For example, the Critical Materials Innovation Hub at Colorado School of Mines focuses on improving primary mineral processing and recovery, as well as secondary recovery through recycling of manufacturing waste and end-of-life products.^xv

Innovative digital technologies are driving copper discovery and enhancing recovery rates

The future of copper exploration lies in leveraging cutting-edge digital technologies, geophysical techniques and real-time data capture to de-risk investment and accelerate discovery. Companies are leveraging AI and satellite-enabled technology such as the one at Eagle Mountain Mining's Silver Mountain project to enable 3D subsurface mapping up to 2.5km deep.^xvi This approach addresses the limitations of traditional geophysical methods to identify untapped mineralized systems, showcasing the potential for data-driven exploration breakthroughs.

Advanced mineral processing can optimize recovery and enhance productivity. Leaching technology has proved to be beneficial in recovering metals from lower ores. Copper companies utilizing bioleaching process to extract copper from primary sulphide ores are achieving remarkable recovery rates of up to 85%, paving the way for more sustainable, high-yield copper production.