The Red Metal Renaissance: Navigating the Path to the $20,000 Tonne

Observations By Ceaser Siwale

As we close the week with copper trading just shy of USD 12,000 per tonne, the market is sending a clear signal: the era of cheap copper is over. The global market has entered a period of definitive structural transformation, shedding its historical cyclicity to embrace a narrative of secular scarcity. Driven by the dual engines of the energy transition and the artificial intelligence infrastructure boom, the “commodity supercycle” has crystallised into a tangible reality defined by plummeting ore grades and a lack of shovel-ready projects.

For investors and industry veterans alike, the pressing questions are clear: Is the touted USD 20,000 per tonne figure a fantasy or a future reality? And if one were to capitalise on this by establishing an exploration fund today, whose doors should be knocked on first?

The Price Trajectory: A Five-Year Outlook

The consensus among major financial institutions reveals a bifurcated outlook: short-term volatility driven by macroeconomic “soft landings” versus long-term appreciation driven by unavoidable physical deficits:

• The immediate horizon presents a complex picture. While some institutions like J.P. Morgan see prices averaging over USD 12,075 due to sticky supply disruptions, others like Goldman Sachs foresee a temporary dip to around USD 10,710. This bearish view predicates on a small surplus as delayed projects finally reach capacity. Essentially, 2026 will be a year of “inventory digestion” a pause for breath before the climb resumes.

• By 2027, the pipeline of committed expansions dries up. Bank of America projects a surge to USD 13,501, marking the beginning of the “supply cliff”. With the low-hanging fruit of brownfield expansions harvested, the market must rely on greenfield projects that are notoriously slow to permit.

• This period represents the point of no return. Morgan Stanley forecasts the market will face its most severe deficit in 22 years widening to 1.1 million tonnes by 2029. To incentivise new production from high-cost, low-grade deposits in high-risk jurisdictions, prices will likely need to exceed USD 14,000.

• By 2030, we enter uncharted territory. Goldman Sachs sees prices hitting USD 15,000 by 2035, implying a trajectory that crosses the USD 14,000 mark by the turn of the decade. At this stage, price discovery is driven by scarcity rather than marginal cost.

The USD 20,000 Debate: Supercycle or Fantasy?

The “USD 20,000 per tonne” figure represents a supercycle peak rather than a sustained average. While currently an outlier forecast, it remains a plausible “tail risk” scenario.

The primary governor on runaway prices is demand destruction via substitution. If copper sustains prices above USD 15,000, the economic argument for substituting it with aluminium becomes overwhelming, particularly in low-voltage and automotive applications. Furthermore, high prices unlock vast reservoirs of scrap metal; a 12% price increase can boost scrap recovery significantly, acting as a natural buffer.

However, a path to USD 20,000 does exist. It requires a “perfect storm”: a continued regulatory stranglehold on new mines in OECD nations, severe geopolitical shocks in key regions like Peru or the DRC, and an aggressive upper-bound growth in AI data centre power demand. If these factors compound, the “electrification of everything” could create a demand shock that supply simply cannot meet.

The Verdict: The trajectory is likely to settle between USD 12,000 and USD 15,000 by 2030. USD 20,000 is the spike, not the plateau.

Supply Dynamics: The Incentive Gap

The industry is suffering from a decade of underinvestment. Average ore grades have declined precipitously, meaning miners must move twice as much rock to extract the same amount of metal.

New supply is constrained. While expansions at mines like Freeport-McMoRan’s Bagdad in Arizona offer some relief, the real growth engine is the African Copperbelt. Zambia has set an ambitious target to triple production, and discoveries like KoBold Metals’ Mingomba deposit, described as one of the world’s largest high-grade finds, are critical.

Yet, the “invisible hand” is already seeking alternatives. Manufacturers like Daikin are swapping copper for aluminium in air conditioning units, and EV makers are reducing copper intensity by up to 40%. While graphene and carbon nanotubes offer theoretical promise, they remain a post-2035 reality for mass adoption.

The capital is available, but it requires speaking a new language: one that fluently translates geological potential into the dialects of national security, social development, and technological innovation. The landscape is not unclear; it has simply been redrawn.