Copper is gaining strategic importance as governments and industries compete to secure supplies of the industrial metal, with investment in artificial intelligence infrastructure, electricity grids and national defense creating new sources of demand.
The shift is strengthening the outlook for copper miners even as concerns over the sustainability of AI spending weigh on technology stocks.
Copper has risen 15.8% year to date and more than 30% over the past 12 months, outperforming gold as investors focus on the metal’s role in supporting technological development, industrial expansion and national security. By comparison, gold futures have fallen 4.11% this year and 4.52% over the past 12 months, while spot gold has declined 4% year to date and 4.89% over the past year.
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The divergence is considered an indication of a shift in investor priorities. While gold traditionally attracts demand as a store of value during periods of economic and geopolitical uncertainty, copper is benefiting from expectations that the expansion of digital infrastructure, electrification and defense capabilities will require sustained investment in physical assets.
Speaking to CNBC’s Squawk Box Europe as LME Week, the global metals industry’s annual gathering, began in London on Monday, Ivanhoe Electric CEO Taylor Melvin said governments and businesses were increasingly treating access to metals as a strategic priority.
Countries, regions and industries are seeking reliable supplies to support national security, economic growth and technology infrastructure, Melvin said, helping underpin copper prices.
“It’s certainly a good time to be in copper mining globally, and specifically in the United States,” said Melvin, whose Arizona-based mining and exploration company focuses on copper, gold, silver, nickel and cobalt.
“We’re really in a world right now where the metals that we used to refer to, and still do, as critical metals are really becoming strategic metals, in every sense of the word,” he added.
Copper is no longer valued solely for its role in conventional industrial production. Its importance to power transmission, electronics, transportation, and the construction of data centers is making dependable access to the metal a growing economic and geopolitical concern.
Copper’s outlook is strengthening as the build-out of AI infrastructure adds to demand from established industrial sectors. Data centers require extensive electrical systems, while the power generation and transmission infrastructure needed to support them adds another layer of copper consumption.
The demand is emerging at a time when investors are questioning whether the enormous capital commitments made by major technology companies will generate sufficient returns. Recent volatility in technology stocks has exposed concerns about AI valuations, the scale of hyperscaler investment and the possibility that spending could eventually slow.
Melvin, however, argued that fluctuations in financial-market sentiment should not be confused with a deterioration in the underlying demand for copper.
“It’s a new pocket of demand, and it really is almost an inelastic demand for copper,” he said, referring to the technology sector’s requirements for the metal.
“It’s hard to think that one of these large-scale technology companies is going to make an investment decision on a hyperscale data center based on the cost of copper.”
His argument is that copper represents a necessary input into infrastructure projects whose overall costs and strategic importance extend far beyond the price of any single material. If companies remain committed to expanding computing capacity, relatively higher copper prices may not be sufficient to derail projects that depend on extensive electrical infrastructure.
That does not make demand entirely immune to a slowdown. If technology companies reduce capital expenditure, delay projects or reassess expected returns, the pace of new construction could weaken. But Melvin’s assessment suggests that short-term changes in equity valuations do not necessarily invalidate longer-term investment plans.
He also identified national security and defense spending as another source of demand that could support the market, broadening copper’s exposure beyond commercial technology investment.
“That same inelasticity applies to another demand pocket that’s emerging, which is national security, national defense budgets,” Melvin said.
“There certainly has been a bit of a retrench, a retreat, in those [tech] valuations. But two things can be true at the same time — you can have a capital market move in sentiment on equity values… but it can also be true that those industries are growing, and they’re going to be a source of incremental demand for our metal.”
The combination of AI infrastructure and defense expenditure could therefore make copper demand less dependent on traditional construction and manufacturing cycles.
US Tariff Uncertainty Tightens The Supply Picture
Trade policy is adding another source of uncertainty to the copper market. The United States has been considering tariffs on refined copper, raising questions about where inventories will be held and whether metal accumulated in the country will remain accessible to buyers elsewhere.
In 2025, the US Commerce Department recommended a 15% tariff beginning January 1, 2027. A final decision on the proposed levy has not been publicly announced, leaving traders and investors to account for the possibility of changes in trade flows.
The prospect of tariffs has encouraged a large share of global copper stocks to be stored in the United States, according to Iain Pyle, senior investment director at Aberdeen Investments and co-manager of the abrdn Future Minerals Fund.
“Because of the potential for US tariffs, a large share of the world’s copper is now stored in the US, and it isn’t clear those stocks will be available to the rest of the market,” Pyle said.
The concentration of inventories in the United States could tighten supplies available to buyers in other regions, particularly if tariff implementation makes it more expensive to move copper across borders. The resulting uncertainty can influence prices even before a policy decision is finalized, as market participants adjust purchasing and inventory strategies in anticipation of potential trade barriers.
Conditions in China, a major consumer of industrial metals, are adding to concerns about availability.
“At the same time, Chinese inventories look exceptionally low and premiums there are rising,” Pyle said.
Low inventories and rising premiums can indicate that buyers are competing more aggressively for immediately available material. If demand remains firm while accessible stocks decline, prices may need to rise further to encourage additional production, investment and recycling.
In an October 15 note, Pyle described copper as the “clearest example” of a market where supply cannot keep pace with demand. He argued that “higher incentives will be needed in the form of sustained higher copper prices.”
Such incentives are important because expanding mine supply typically requires substantial capital, lengthy development periods, and regulatory approvals. Higher prices can improve the economics of new projects, but they do not guarantee that additional production will become available quickly enough to ease near-term shortages.
Pyle nevertheless warned that tariff announcements could trigger a temporary reversal in prices, depending on the final policy and its implications for inventory movements.
“There is still some risk of a pullback around tariff announcements, but we see the underlying fundamentals as clearly bullish, and the potential for a spike in prices has increased,” he said.
Copper’s rally now rests on two related forces: expectations of sustained demand growth and uncertainty over the availability of supply. AI infrastructure and defense spending are expanding the metal’s strategic role, while trade policy and low inventories are complicating the distribution of existing stocks.