Sebastian Perez-Ferreiro
Mining Practice Co-Director
AMI
Few commodities are as central to the future global economy as copper. Prized for its conductivity and malleability, the reddish metal is the backbone of every electric wire, grid and engine sustaining modern life.
As the world electrifies – from vehicles to factories, homes and data centers – copper’s strategic role has shifted from base metal to critical mineral. In fact, copper appears on the U.S. Geological Survey’s draft 2025 list of critical minerals for the first time since 2018, reflecting its growing importance in sectors like transportation, defense, and the electric power grid.
For producing nations, particularly in Latin America, this transition heralds a generational opportunity, especially as the International Energy Agency (IEA) expects a 30% copper supply shortfall by 2035, when production is expected to decline to less than 19 million tonnes from around 24Mt by the end of the decade, with exploration budgets dwindling amid declining copper grades. In turn, global demand is expected to grow considerably – IEA projects 37Mt by 2050, while BloombergNEF forecasts a more aggressive 50Mt peak.
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The Three Forces Driving Copper Demand
The drivers of global copper demand extend far beyond construction and industrial use and can be explained by three trends that are expected to guarantee decades of structural demand growth: global electrification and cooling needs, electric vehicles and charging infrastructure, and renewable energy and grid modernization.
The expansion of electricity access, the boom in data centers and rising living standards across Asia are all copper-intensive processes. Data centers, which power cloud computing and artificial intelligence, require vast amounts of copper for power cables, transformers and cooling systems. Goldman Sachs recently flagged AI-driven infrastructure as a new leg of the copper supercycle. The IEA estimates that copper use in data centers could range from 250,000 to 550,000 tonnes by 2030, accounting for approximately 1-2% of global copper demand.
Air conditioning alone is a formidable driver, with every air conditioner requiring significant amounts of copper. With a rising middle class in Asia and record global heat, the IEA estimates that cooling demand could triple by 2050.
Meanwhile, EVs contain up to four times more copper than combustion-engine vehicles, while the infrastructure to charge them, including power transmission upgrades, ties copper directly to the auto sector’s electrification. BloombergNEF estimates that 50% of new cars by 2040 will be EVs.
As the most efficient non-precious metal conductor of electricity and heat, copper serves as the circulatory system that enables the energy transition.
Photovoltaic (PV) systems utilize copper in wiring, inverters, transformers, and grounding systems. Solar power systems contain approximately 5.5t of copper per megawatt (MW), according to the Copper Development Association. Onshore wind power requires 2.5-4.5t of copper per MW, and offshore wind is even more copper-intensive – up to 8t per MW due to subsea cabling and larger turbine size.
Latin America at the Center of Copper’s Future
As global demand rises, copper-producing nations are racing to secure investments, modernize infrastructure, and position themselves at the center of the next supercycle. And Latin America, with nearly 40% of the supply and the world’s largest reserves, wants to cement its place as a copper leader.
Chile, the world’s largest producer, is expected to see production grow by 4.6% this year and 3.6% in 2026, reaching 5.97Mt.
Chilean copper commission Cochilco estimates that US$65.7 billion in planned investments for 51 projects will come online between now and the early 2030s. These include expansions, structural replacement projects and new developments mostly in northern Antofagasta and Atacama regions, with major projects by Codelco, BHP, Anglo American, Antofagasta Minerals, and Freeport.
To attract even more investments, Chile has passed a law to speed up project permitting. Furthermore, leftist President Gabriel Boric’s administration recently approved an environmental impact study for Lundin’s Caserones operational adaptation project in the Vicuña mining district, which had been stuck in a five-year bureaucratic process.
For its part, Argentina is experiencing a copper renaissance initiated by enthusiastic pro-mining provincial governors within a federalist regulatory system. The election of President Javier Milei’s libertarian government has added two important drivers of investment: i) the lifting of currency controls that taxed or limited the repatriation of mining profits and ii) a looser interpretation of federally mandated glacier protection laws that prevented investment in some of Argentina’s highest-yielding copper deposits.
Glencore has applied to place its El Pachón deposit in San Juan province and the Agua Rica deposit in Catamarca under Milei’s so-called Incentive Regime for Large Investments, or RIGI, which means that the Switzerland-based firm’s combined US$13.5 billion capex will have a 30-year tax stability regime, constitutional protections against regulatory overreach and customs exemptions. It will also benefit from a lower corporate tax rate and the ability to repatriate profits without being hindered by Argentina’s notorious foreign exchange controls.
Perhaps best of all, RIGI’s constitutional safeguards guarantee that future, less pro-business administrations cannot repeal these incentives, taking Argentina’s historical political risk off the table.
Argentina’s lesson is that just as countries stand to benefit from royalties and mining-specific taxes, the State also has to offer safeguards, incentives and sometimes intervene to smooth relationships between miners and local communities.
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Take the case of Cobre Panamá. Operated by Canada’s First Quantum Minerals via its local subsidiary Minera Panamá, the mine produced 331,000t in 2023, accounting for about 1.5% of global copper production that year.
Cobre Panamá was not only a major copper producer but also a critical economic pillar for the country, contributing approximately 5% of Panama’s GDP, 9% of the nation’s tax revenue and 75% of its exports in 2023.
But in October 2023, after the National Assembly fast‑tracked approval of a revised 20‑year concession for First Quantum Minerals, protesters blocked highways and ports, triggering a major economic disruption. A month later, the Supreme Court ruled the law granting the concession unconstitutional, ordering the shutdown of the mine, and First Quantum suspended operations shortly afterward. Furthermore, then-president Laurentino Cortizo promulgated a law prohibiting new mining concessions in the country.
Panama’s economy has suffered significantly since the closure. GDP growth slowed from over 7% in 2023 to approximately 2.9% in 2024, as export revenues plummeted. Fitch downgraded Panama to junk status, while S&P warned that First Quantum’s arbitration claims could amount to 20 % of GDP in liabilities.
President José Raúl Mulino, who was sworn in in July 2024, has signaled a possible reopening under a new model, most likely a public–private partnership that ensures greater state oversight and more equitable revenue sharing.
Minera Panamá estimates that reactivating the mine would create 20,000 direct and indirect jobs in six months and over 40,000 in the first year of operations at a time when Panama is facing an unemployment crisis following the exit of Chiquita Brands from the Central American country and an 18% economic contraction in the first year of COVID, the worst in Latin America.
Though he must first win over a population that remains skeptical of the mine’s benefits, Mulino could play a critical role in creating Panama’s own copper rebirth. Should he reach a new deal with First Quantum Minerals, total annual revenue could surpass US$3 billion, with the government’s fiscal take at around US$600 million, based on previous production and with copper trading at US$4.30/lb.
Elsewhere in the region, Ecuador’s mining ministry has launched a new registry of mining concessions for the first time in seven years in a bid to attract more investments and curb illegal mining operations. In the meantime, the Andean nation has a reliable, large-scale copper mine in Mirador, and SolGold’s Cascabel project, which has the potential to become a major copper-gold mine.
Challenges Facing Copper Producers
Although copper has strong prospects based on future demand, producers face persistent challenges such as the steady decline in ore quality, which, along with inflation, has increased capital costs. According to accounting and consulting firm EY, the average capital intensity for copper projects has increased to over US$20,000/t from approximately US$ 16,000/t in 2021.
In mature copper jurisdictions like Chile and Peru, copper yields are dropping, requiring mining projects to be larger in scale and thus more costly per tonne extracted, more environmentally disruptive and hence more exposed to above-ground risk.
This trend should drive miners to explore in higher-yielding, less mature jurisdictions like Ecuador, Panama, Colombia and the Dominican Republic, but these remain territories where much work needs to be done to create a set of mining laws that provide proper legal security and incentives, and convince skeptical populations of the merits of a well-governed mining industry.
Meanwhile, for an industry that relies on new deposits to replace dwindling reserves, the decline in new discoveries should raise deep concerns. According to an analysis by S&P Global Commodity Insights, of the 239 major copper deposits discovered between 1990 and 2023, only 14 were discovered in the past decade (2014–2023). The volume of copper in those 14 deposits totaled just 46.2Mt, or approximately 3.5% of the total copper discovered since 1990.
Another major challenge is price uncertainty. Chile’s Cochilco expects copper to average US$4.15-4.30/lb in 2025 and 2026, following an average of US$4.15/lb in 2024 – a level below the optimal threshold for new investments. Recent market dynamics, including tariffs and supply constraints, have led to price volatility.
A Blueprint for Copper-Producing Nations
To reap the benefits of the copper boom, countries must create a credible and verifiable package of policies, environmental best practices and public engagement that simultaneously reduces investor risk and builds local trust. The following three-pronged approach is based on countries that successfully combined stable legal frameworks, environmental safeguards, and community engagement to attract long-term mining investment.
A predictable legal and financial framework
Publish a mining code that clarifies permitting steps, decision timelines, tax regime, and rights and obligations for investors and communities.
Offer time-limited fiscal incentives (tax credits, accelerated depreciation) that are explicitly conditional on ESG. Utilize partnerships with multilateral development banks and export credit agencies to co-finance infrastructure projects and provide political risk insurance.
Chile has maintained a stable, investor-friendly legal and tax framework for decades, which has attracted long-term foreign investment in copper mining. Clear permitting processes, contract enforcement, and fiscal transparency helped Chile become the world’s largest copper exporter.
World-class environmental, safety and governance standards
Adopt and enforce international best practices for tailings dam design and management, water management, biodiversity offsets, and mine closure planning. Require independent, third-party design review and periodic safety audits for tailings and critical infrastructure, as well as mine reclamation bonds and third-party insurance for catastrophic failures.
Commit to the Escazú Agreement principles: access to environmental information, public participation, and access to justice in environmental matters. Institutionalize proactive disclosure of environmental impact studies and monitoring data.
Colombia has legal and technical guidelines for designing biodiversity offsets in mining and infrastructure projects, aiming to achieve “no net loss” of biodiversity through ecological equivalence, the mitigation hierarchy and tools like habitat banking. The efforts align with international best practices such as the Business and Biodiversity Offsets Programme.
Social license and community engagement
Implement prior and informed consent–style community consultation processes in which to share baseline studies, explain benefits and risks, and document community agreements.
Roll out community benefit packages tied to performance. Design local hiring quotas, skills training funds, locally focused SME procurement targets, and community development trusts that disburse funds based on the mine’s verifiable milestones.
Peru’s Antamina has long-standing programs for local employment and supplier development. For example, since 2003, it has provided business management support to Constructora Minería Scp (Comissa) in the Áncash region.
Securing the Future
For producers, particularly in Latin America, the combination of rising structural demand, abundant reserves, and strategic government policies creates an unparalleled opportunity. Yet realizing this potential requires creating the proper incentives, securing buy-in from local stakeholders, and navigating market volatility and declining ore grades.
Countries and companies that align incentives, invest prudently, and foster stable regulatory frameworks will not only secure fiscal benefits but also cement their role as leaders of the low-carbon, electrified world. In this new era, the future truly belongs to copper producers.
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