After LME copper broke through $14,500 per tonne, the market typically attributes the rise to demand from AI, power grids, and electrification. However, a deeper contradiction stems from declining upstream resource grades. BHP achieved record mining and beneficiation volumes at its Escondida mine in the first nine months of fiscal year 2026, yet copper production declined by 3%, primarily due to a drop in ore grade from 1.05% to 0.91%.
This means mining companies need to process more ore and consume more energy and materials to maintain similar production levels.
Supply replenishment is equally slow. IEA data shows that the global average copper mine grade has decreased by 40% since 1991, and the capital intensity for expansion of existing mines has increased by 65% since 2020. Of the copper resources discovered in the past 35 years, only 5% have come from the last decade, and new projects take an average of about 17 years from discovery to production. Annual copper concentrate processing fees have fallen to zero by 2026, with spot processing fees even turning negative, reflecting ample smelting capacity but insufficient concentrate available for processing.
