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Digging Into Demand: Copper's Scarcity Premium Is Rising
Authored by Jeffrey Neal Johnson. Posted: 1/29/2026.
In Brief
- The explosive growth of artificial intelligence data centers is driving an unprecedented surge in copper demand.
- Major mining producers are utilizing new leaching technologies to extract additional value from waste rock stockpiles without digging new mines.
- Investors can access this structural growth trend through diversified funds that offer broad exposure to global producers rather than single stocks.
Gold and silver have dominated financial headlines over the last 18 months. Driven by central bank buying, geopolitical instability and global economic uncertainty, precious metals have served as a safe haven for investors. But as we enter February 2026, the narrative is shifting: the defensive trade is giving way to a growth trade led by copper.
Currently testing the $5.85 to $6 per pound range (approximately $12,900 per metric tonne), copper is decoupling from traditional industrial cycles. In previous decades, copper prices tracked construction and GDP — when housing slowed, copper fell. That correlation is breaking. A new, relatively price-inelastic dual engine now drives demand: the electrification of the global power grid and the massive energy requirements of artificial intelligence (AI).
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Today's copper story is about more than building electric vehicles. Data centers running advanced AI models consume exponentially more power than traditional server farms and require vast amounts of copper cabling for transmission lines, transformers and grounding systems. At the same time, global copper supply is tightening due to aging mines and a scarcity of major discoveries. That supply-demand imbalance creates a compelling setup unlike any cycle investors have seen before.
Freeport-McMoRan: Capturing the AI Demand Wave
For investors looking to capitalize on the surge in copper demand tied to AI and electrification, Freeport-McMoRan (NYSE: FCX) stands out as a primary beneficiary.
As one of the world's largest publicly traded producers, Freeport's stock price is highly sensitive to the metal's spot price.
Unlike diversified miners that also sell iron or coal, Freeport is a pure copper play. When copper prices rise, Freeport's profit margins expand substantially.
That leverage was evident in the company's fourth-quarter earnings report released on Jan. 22, 2026. Freeport reported earnings per share (EPS) of $0.47, beating analyst estimates of $0.28, and revenue of $5.63 billion. Those results confirm that demand from the tech and infrastructure sectors is translating into real cash flow.
Innovation Through Leaching
Beyond traditional greenfield projects, Freeport is deploying a technique that sets it apart: leaching technology. Developing a new mine can take more than 15 years because of permitting, environmental studies and construction. Freeport, however, owns massive stockpiles of waste rock from decades of prior operations.
Applying new, proprietary leaching processes to those stockpiles allows the company to extract residual copper that was previously deemed uneconomic. This approach brings new metal to market without the capital intensity or decade-long delay of building a new mine. It is the quickest way for a major producer to help relieve the immediate supply squeeze created by the AI boom.
Navigating Supply Constraints
Investors should note Freeport is managing Challenges at its Grasberg district in Indonesia following a mudslide in late 2025. While this has temporarily reduced production, it also supports the bullish case: the temporary loss of supply helps keep copper prices elevated, which lifts the profitability of Freeport's operations in North and South America.
Southern Copper: The Value of Scarcity
While Freeport represents a demand-side beneficiary, Southern Copper Corporation (NYSE: SCCO) illustrates the value of scarcity on the supply side.
In mining, reserves — the amount of metal in the ground that is economically viable to extract — are the ultimate asset. Southern Copper holds the largest copper reserves of any publicly listed company.
As permitting for new mines becomes increasingly difficult due to stricter environmental rules and local opposition, companies with existing, approved projects command a premium. Southern Copper is capitalizing on that advantage with its massive TΓa MarΓa project in Peru.
Project Progress and Income
After years of delays, TΓa MarΓa is now under construction and roughly 25% complete as of early 2026. That progress is a key differentiator: while competitors still hunt for deposits or fight for permits, Southern Copper is pouring concrete. TΓa MarΓa is one of the few large-scale supply sources slated to come online in the near term, giving the company a distinct growth profile as the global supply cliff approaches.
Southern Copper also appeals to income-oriented investors. The company recently declared a quarterly dividend of $1 per share. In the volatile world of commodities, that payout is a meaningful bonus — it provides yield while investors wait for TΓa MarΓa to ramp to full production. Political risks common in Latin America remain, but the company's low-cost operations in Mexico offer a financial cushion that helps protect the dividend.
How to Invest Without Picking Winners
Investing in individual mining stocks carries company-specific risks that the metal itself does not. A mine collapse, a labor strike or a change in local tax law can hurt a stock even as copper prices rise. For investors who want exposure to the copper thesis — that prices will rise due to shortages — without taking on single-company risk, Exchange-Traded Funds (ETFs) offer an efficient alternative.
- Global X Copper Miners ETF (NYSEARCA: COPX): Provides broad diversification across roughly 48 miners globally, including Canadian, Latin American and Australian firms. It's a good vehicle for investors seeking broad sector exposure; losses at one miner are offset by holdings in others.
- Sprott Copper Miners ETF (NASDAQ: COPP): A more aggressive option with heavier weightings in large-cap, pure-play miners like Freeport-McMoRan. If major producers rally, this ETF is designed to capture that upside more directly than a broader index, acting as a concentrated bet on industry leaders.
The Structural Floor for Copper
The current rally in copper is fundamentally different from speculative surges in cryptocurrency or fear-driven buying of gold. It is driven by utility and necessity: the world cannot build AI data centers, electric vehicles or renewable power grids at scale without copper. There is no substitute.
With prices testing historical highs and supply constraints worsening, copper appears to have established a structural floor. Whether through volume leaders like Freeport-McMoRan, reserve giants like Southern Copper, or diversified ETFs, the evidence suggests the copper sector is positioned for a multi-year run. For investors who missed the early move in precious metals, copper now offers a strategic entry into the next — and potentially most durable — phase of the commodities cycle.
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