Copper’s Supply: Canada Emerges as a Strategic Investment Destination
Copper markets are facing an increasingly challenging supply outlook as demand accelerates, ore quality deteriorates and the cost of developing new mines continues to climb. Recent revisions to market forecasts suggest that the gap between copper supply and consumption could become significantly wider than previously anticipated.
Goldman Sachs has raised its estimate for the 2026 refined-copper deficit outside the United States from just 60,000 tonnes to 640,000 tonnes, following a 350,000-tonne reduction in its global mine-supply forecast. The bank expects the shortfall to narrow to 170,000 tonnes in 2027, although the revised outlook underscores the scale of the near-term supply challenge.
Other financial institutions are also anticipating a tighter market. UBS projects a global copper deficit of 520,000 tonnes in 2026 and expects prices to reach US$14,500 per tonne by year-end. Citi has outlined a similarly bullish outlook, suggesting copper could trade at US$14,500 per tonne during June 2026 and reach US$15,000 within 12 months. Longer-term price expectations remain elevated, with BMO Economics forecasting an annual average of US$5.90 per pound, equivalent to approximately US$13,000 per tonne. S&P Global and the World Bank have projected annual averages of slightly more than US$12,100 and US$12,000 per tonne, respectively.
Production difficulties at major mining companies are adding to these concerns. Codelco, the world’s largest copper producer, has acknowledged that its previous ambition of producing 1.7 million tonnes of copper within four or five years is no longer achievable. Chairman Bernardo Fontaine told Radio Infinita that the company had failed to meet its production forecasts for seven consecutive years, adding that 2026 would also be a difficult year for output.
The supply outlook is becoming more complicated as geopolitical instability introduces further risks. As highlighted in our recent analysis, “Copper’s New Demand Stack”, HSBC has warned of a potential “super-squeeze” affecting copper and other commodities following the closure of the Strait of Hormuz. Such disruptions illustrate how vulnerable commodity markets have become to interruptions along critical transport and energy routes.
At the same time, copper demand is expanding across several structural growth sectors. Artificial intelligence infrastructure, electric vehicles, defence spending and industrial re-establishment are all increasing the need for reliable supplies of the metal. Meeting this demand will be difficult as the quality of existing mineral deposits declines. Average copper ore grades at mines worldwide have fallen by approximately 40% since 1991, meaning operators must process more material to recover equivalent quantities of metal. Higher capital expenditure, technically complex projects and increasingly fragile supply chains are adding further pressure.
These forces are changing how investors evaluate copper assets. Production potential remains important, but the security, predictability and resilience of supply are becoming increasingly influential in capital allocation decisions. This shift is creating an advantage for jurisdictions that combine established mining industries with stable regulatory environments, dependable infrastructure and reliable access to major markets. Canada is particularly well positioned to benefit.
Investment activity already reflects this growing strategic importance. More than US$5 billion in Canadian copper-related projects was announced in 2025, with further commitments expected as companies seek to strengthen supply security and expand future production capacity.
One of the most significant developments is Teck Resources’ approval of the Highland Valley Copper mine-life extension. The investment, valued at approximately US$1.5 billion to US$1.7 billion, is intended to extend the operating life of Canada’s largest copper mine from 2028 to 2046. Average annual production is expected to reach approximately 132,000 tonnes, helping preserve an important source of domestic copper supply over the longer term.
British Columbia is also becoming a focal point for major expansion projects. In June 2026, Newmont received significant provincial approvals for its US$2.4 billion Red Chris block-cave expansion. The project is expected to make a substantial contribution to Canada’s copper production, with estimates suggesting it could increase national output by approximately 15%.
In Saskatchewan, Eldorado Gold’s US$2.79 billion acquisition of Foran Mining provides exposure to the McIlvenna Bay copper project. The project produced its first copper concentrate on 7 June 2026, with commercial production targeted for the third quarter of the year. Its development represents another step towards bringing additional Canadian copper supply to market.
Ontario is attracting attention through both established mining operations and emerging projects. Vale and Glencore have announced plans for a copper joint venture in the Sudbury Basin, involving an investment estimated at US$1.6 billion to US$2 billion. The venture is targeting total production of 880,000 tonnes of copper over a 21-year period.
Meanwhile, the proposed Teck–Anglo American merger includes a commitment by the combined company to invest at least US$3.2 billion in Canada over five years. Although this commitment extends beyond copper alone, it reinforces the country’s importance within the future investment strategies of major mining companies.
Generation Mining has also secured a subordinated debt commitment of US$142 million from the Canada Infrastructure Bank for its Marathon Copper-Palladium Project in northwestern Ontario. This brings the project’s committed funding to approximately US$710 million. Over an anticipated 13-year mine life, the operation is expected to produce 532 million pounds of copper, alongside palladium, platinum, gold and silver.
Capital expenditure trends further demonstrate the growing momentum behind Canadian copper development. Spending on Canadian copper-zinc mining projects was initially projected to increase by 113% in 2025, reaching approximately US$1.34 billion. Preliminary figures subsequently indicated expenditure of around US$1.37 billion. For a country estimated to have mined approximately 500,000 tonnes of copper in 2025, equivalent to roughly 2% of global mine production, this represents a notable increase in investment intensity relative to its existing production base.
The contrast with the global supply outlook is significant. Worldwide copper mine output is expected to grow by only 1.6% in 2026, while the International Energy Agency has warned that the existing pipeline of copper projects could leave supply approximately 30% below requirements by 2035. These projections highlight the difficulty of expanding production quickly enough to accommodate rising consumption and replace declining output from ageing operations.
Canada is unlikely to match the production scale of leading copper-producing countries such as Chile and Peru in the near term. However, its competitive advantage is not dependent on becoming the world’s largest producer. Instead, the country’s strategic value lies in its ability to offer Western consumers a more dependable source of copper and reduce exposure to supply disruptions.
Major producers in Chile and Peru face a combination of declining ore grades, water scarcity, social opposition and permitting delays. In the Democratic Republic of the Congo, governance concerns, unreliable electricity supplies and security challenges can complicate project development and operations. These jurisdictions remain essential to global copper supply, but their production potential can carry greater exposure to operational and political disruption.
Geopolitical risk is also becoming more complex than traditional assessments of ore quality, mine life and community relations. Recent instability in the Middle East has reinforced the importance of a mine’s geographical position, its distance from vulnerable energy corridors, access to dependable electricity, control over critical processing inputs such as sulphur, and the ability to transport products without relying on strategically exposed maritime chokepoints.
Canada offers an alternative profile. Its membership of NATO, participation in the United States–Mexico–Canada Agreement and established rule of law strengthen its position as a trusted supplier to North American industry. Its existing trade relationship with the United States is particularly important: between 2021 and 2024, Canada supplied more than 99% of US imports of copper ore and concentrates, as well as 16% of its refined copper imports.
This relationship illustrates why Canadian copper may command greater strategic value than its share of global production alone would suggest. For US manufacturers and policymakers seeking to reduce dependence on vulnerable supply routes and politically uncertain producers, a reliable Canadian source can provide an important measure of security.
As copper demand continues to rise and the development of new mines becomes more expensive and complex, the market is likely to place increasing value on supply reliability alongside price and production volume. Canada’s opportunity is therefore not simply to produce more copper, but to strengthen its role as a trusted supplier in a market where dependable access to critical minerals is becoming an increasingly important economic and geopolitical priority.
