The construction of artificial intelligence infrastructure is driving up demand for copper in data centers, power equipment, transmission networks, and related facilities. However, copper mine productivity continues to decline, and the difficulty of developing new mines is increasing, making it difficult for supply expansion to keep up with demand. Even based on a relatively conservative growth forecast for AI infrastructure, mining companies may need to increase the ratio of capital expenditure to operating expenditure to increase copper supply. As shown in the chart, the ratio of capital expenditure to operating expenditure in pure copper operations reached approximately 60% in fiscal year 2013, and has since declined; the chart predicts that this ratio will be around 22% by fiscal year 2030. Wellington believes that copper prices may need to rise to incentivize mining companies to further increase investment. However, insufficient exploration activity over the past 15 years, a shortage of skilled personnel, and mining permit approvals and environmental constraints may still limit new supply. Rising copper prices may not only benefit copper commodities themselves but also improve the economics of increasing capital investment for copper mining companies.
