Investors looking for the commodity most likely to mirror gold’s performance over the rest of this decade need only look at copper for the commodity with the greatest potential to achieve this feat. This is because of the emerging supply/demand gap that is only going to continue to grow. The gap is expected to expand so quickly that it has been coined the ‘Copper Crunch’.

The Copper Crunch will be extreme

Global copper consumption is ~26.5Mt today, and the deficit is a modest ~200,000tpa. But consumption is forecast to rise sharply as EVs (≈80kg copper vs ~25kg for ICE cars), renewable energy, grid infrastructure and data centres scale simultaneously. BloombergNEF has estimated that demand will reach ~35Mt by 2035 and ~50Mt by 2050.

On the supply side, no major new world-class copper deposit has entered production at scale in over a decade. Existing mines are ageing, ore grades are declining, and greenfield projects require 7–10 years from discovery to production. Political, water and labour risks in Chile and Peru (≈40% of global supply) add persistent disruption risk.

The Crunch will be good news for copper miners

The Crunch will mean significantly higher copper prices. We are already seeing an impact with LME copper prices up >50% in 18 months and believe more growth is to come. We have modelled various scenarios, and our base case is a US$21,250/t price in the years ahead.

We also modelled bull, bear and electrification cases, which are $28,500/t, $36,750/t and $7,000/t, tied to various supply and demand growth scenarios. This will mean that copper projects will make significantly more money; a typical copper miner with a ~30% margin now will see a 46% margin in our base case scenario.

These quality stocks can win

Investors who buy copper miners and explorers listed on the ASX will gain exposure to the upside in the copper price. However, not all copper companies are created equal. The companies that will do the best will be the companies that have high-quality projects in favourable jurisdictions with persistent operational performance.

Investors with patience may consider small-cap explorers or developers; even if such companies take a few years to bring projects into production, their timing could be perfect. Two quality explorers include Alma Metals (ASX:ALM) and Revolver Resources (ASX:RRR) and two high-quality miners are Evolution Mining (ASX:EVN) and Sandfire Resources (ASX:SFR).