How Will Mining Giants Adapt as Copper Tops $13,000?

The copper market is experiencing unprecedented volatility as mining operations grapple with supply constraints and demand pressures that have pushed prices beyond US$13,000 per metric tonne for the first time.

For mining companies, this price surge presents both opportunities and operational challenges that could reshape the sector's strategic priorities.

On 6 January 2025, three-month copper futures on the London Metal Exchange (LME) exceeded the US$13,000 per metric tonne threshold, marking a 42% increase over the past year. This could represent the metal's most significant rally since 2009, driven by a combination of geopolitical tensions and severe physical scarcity that is testing the resilience of mining operations worldwide.

Trade policies reshaping mining strategies

A fundamental driver behind this valuation is a significant distortion in global trade flows affecting mining companies' distribution networks.

According to analysts at ING, including metals strategist Ewa Manthey and head of commodities strategy Warren Patterson, the Trump Trade represents a critical catalyst.

The market remains focused on a June 2026 policy review following the 50% tariffs imposed on semi-finished copper products in 2025. With the possibility of a 15% tariff increase on refined metal, mining companies have been redirecting shipments to the United States ahead of the decision.

This has created what could be described as a disjointed inventory situation across global markets. Warehouses on the Commodity Exchange (COMEX) in the US hold a record 450,000 tonnes, representing approximately half of all global exchange stocks.

However, the rest of the world faces a shortage of the metal. In London and Shanghai, inventories have declined by more than 55% since last August.

This geographical imbalance has left mining companies navigating divergent regional markets while the LME cash-to-three-month spread remains in deep backwardation, which could signal urgent demand for immediate supply.

Mining disruptions exposing market vulnerabilities

On the supply side, mining operations are confronting significant operational challenges that could highlight the sector's vulnerability to labour disputes and production interruptions. Market stability was severely affected on 2 January 2024 by the commencement of strike action at the Mantoverde mine in Chile.

The facility, operated by Capstone Copper, accounts for approximately 0.5% of global mined output. Although a modest percentage, the strike acted as a catalyst in a market that had already endured a year of disruptions at major mining sites like Grasberg and Kamoa-Kakula.

According to Capstone's official statement, production may be reduced to just 30% of capacity during the dispute. For mining executives, this underscores that the industry's buffer to absorb supply shocks has virtually disappeared.

The combination of labour unrest and existing supply chain pressures has created a precarious situation for the global copper market.

Mining companies adapting strategies

The US$13,000 price level is transforming the competitive landscape for mining operators. Freeport-McMoRan (FCX) appears to be a clear beneficiary.

As the principal North American producer, its ability to supply US manufacturers without the tariff-drag has seen its cash flows reach record levels, positioning the mining company advantageously in the current environment. The company's strategic location provides a significant competitive advantage.

Glencore has adopted a different approach, moving towards copper circularity. The mining company is expanding its recycling partnerships with Schneider Electric to bypass the tightening concentrate market as it faces declining ore grades and production challenges at its Collahuasi mining site.

Meanwhile, Rio Tinto is intensifying its focus on its Oyu Tolgoi mining project in Mongolia with a target of a 15% production increase in 2026 to address a projected 2026 deficit of 300,000–400,000 tonnes. This expansion represents a critical component of the company's growth strategy.

Mining sector outlook

J.P. Morgan anticipates a full-year average of US$12,075 per tonne, while the AI megatrend provides a structural basis for demand with data centre expansion alone projected to consume an additional 110,000 tonnes of copper in 2026. The long-term demand trajectory remains robust.

For mining executives, the period of stable operating conditions has ended. Success in 2026 will likely depend on maintaining operational continuity, investing in mine expansion projects and developing partnerships that secure market access amid evolving trade policies.

The mining sector must balance maximising returns from elevated prices while addressing the structural supply constraints that could define the industry's trajectory for years to come. Strategic agility will be essential for navigating this volatile market environment.