The copper party is still rolling
Rio Tinto just logged its best first-half earnings in four years, and copper is doing a lot of the heavy lifting. Underlying earnings jumped to $6.85 billion, with copper EBITDA up 84% to $5.7 billion — the kind of numbers that make miners look like they’ve found the cheat code.
But here’s the catch: the story isn’t just “copper good.” It’s “copper supply is getting weird.” The metal is now powering more of Rio’s profit mix than iron ore, and CEO Simon Trott pointed to rising data center and grid-storage battery demand. Translation: the world wants more copper yesterday.
The bottleneck behind the boom
The problem is the machine behind the metal. New supply is mostly coming from expanding old mines, not discovering shiny new ones. That’s a lot like paying off one credit card with another — it buys time, but it doesn’t exactly scream long-term stability.
And then there’s smelting. China has built more than 90% of new processing capacity over the last 20 years and now controls about half the market. Treatment and refining charges have fallen to zero, spot charges have been negative, and smelters outside China are running below 70% capacity. That’s not a healthy industry; that’s an industry held together with duct tape and very expensive optimism.
Why investors should care
This isn’t just a miner story. It’s a pricing story.
- Copper demand is being pulled higher by power grids, EVs, and data centers.
- Supply is constrained by aging mines, concentrated processing, and maintenance risk.
- Citi still sees copper at $14,500/ton in the near term and $15,000 by year-end, well above current LME levels.
If copper stays tight, miners with production upside can keep minting cash. But if the supply chain keeps fraying, the real winner may be the commodity itself — because scarcity has a way of making prices look very handsome.
Big picture: Copper is acting like the world’s favorite bottleneck. Great for pricing. Terrible for anyone trying to build more of it.