Investors say copper is becoming increasingly strategic for governments and industry as artificial intelligence, power grid investments and defense spending drive demand for the industrial metal.
The metal, a key component of electronics, construction and transportation and often seen as a barometer of economic activity, has outperformed gold this year due to the growing need to ensure reliable supplies.
Copper is up 15.8% since the beginning of the year and more than 30% in the past 12 months. In comparison, gold futures It has fallen -4.11% since the beginning of the year and -4.52% in the past 12 months. spot gold It is down 4.89% over the past 12 months and down 4% year-to-date.
Ivanhoe Electric CEO Taylor Melvin told CNBC’s “Squawk Box Europe” that countries, regions and industries are increasingly focused on securing access to metals for national security, economic growth and technology infrastructure. Melvin said this change supported copper prices.
“It’s certainly a good time to get into copper mining globally, especially in the United States,” said Melvin, whose Arizona-based mining and exploration company focuses on copper, gold, silver, nickel and cobalt.
“We’re now in a world where the metals that we used to call critical metals, and we still call them that, are actually becoming strategic metals in every sense of the word,” said Melvin, speaking in London on Monday at LME Week, an annual gathering of the global metals industry.
AI and defense demand
The shift comes as investors question the sustainability of AI spending and hyperscaler ramp-up, which has led to recent turmoil in tech stocks.
But Melvin said he expects copper to withstand the recent volatility.
copper.
“This is a new pocket of demand, and the demand for copper is actually almost inelastic,” he said of the high-tech industry’s demand for copper. “It’s hard to imagine one of these large technology companies making a hyperscale data center investment decision based on the cost of copper.”
He added: “The same inelasticity applies to new emerging demand pockets, such as national security and defense budgets. So when you look at the demand for copper, the impact of technology, the artificial intelligence infrastructure, I think we can all agree that that market is growing.”
“Certainly there have been some declines and setbacks in these (technology) valuations. But two things can be true at the same time. Capital market sentiment towards stocks can fluctuate…But it can also be true that these industries are growing and that these industries will be a source of increased demand for our metals.”
US copper tariffs
Uncertainty over whether the United States will impose tariffs on refined copper also supported the rally. The Department of Commerce recommended in 2025 that a 15% tariff be imposed starting January 1, 2027, but a final decision on the proposed levy has not yet been published.
gold.
Ian Pyle, senior investment director at Aberdeen Investments and co-manager of the Abdon Future Minerals Fund, said: “Due to potential US tariffs, the majority of the world’s copper is currently stored in the US and it is unclear whether these stocks will be available in other markets.”
“At the same time, Chinese inventories appear unusually low and premiums are rising.”
Copper is “the most obvious example” of a market where supply cannot keep up with demand, Pyle said in an Oct. 15 note. “Higher incentives will be needed in the form of continued increases in copper prices.
“While there is still some rebound risk surrounding the tariff announcement, we continue to view the underlying fundamentals as clearly bullish and the potential for price spikes is increasing.”
