Global Copper Mine Supply Set for First Drop Since 2017

Global mined copper production is projected to fall for the first time since 2017. Sprott Asset Management attributes this decline to operational disruptions and falling ore grades. The drop occurred even as copper prices reached record levels. Mine output decreased by 1.1 percent in the first half of 2026. Two major incidents removed an estimated 600,000 tonnes from expected annual production. This volume represents approximately 2.5 percent of global mine supply.

Jacob White, director of ETF product management at Sprott, noted that higher prices cannot accelerate development timelines. The average time from discovery to production remains 17.5 years. This structural constraint collides with rising demand from power grids and data centers. US tariff policies have also diverted large volumes of refined metal into American warehouses. Copper prices gained 47 percent in the 12 months leading up to August. Sprott manages approximately 55 billion US dollars in assets.

Chilean Output Falls Sharply

Chile remains the primary weak point in global supply. The country accounted for 23 percent of world mine production last year. Output fell by 6.6 percent in the first half of the year. July production dropped by 9.4 percent year over year. State commission Cochilco cut its 2026 forecast to 5.27 million tonnes. This figure is 2.6 percent below last year’s level. Codelco abandoned its 2026 production target in August due to operational setbacks.

A fatal accident at the El Teniente mine has suspended development of the Andes Norte section. This suspension could last for as long as two years. Private producers Antofagasta and Lundin Mining also reduced their 2026 forecasts. They removed a combined 35,000 to 55,000 tonnes from expected output. Lundin lowered its outlook following a severe winter storm in Chile. BHP expects production at Escondida to fall to 1 million to 1.1 million tonnes in fiscal 2027. This is a drop from 1.26 million tonnes in fiscal 2026 due to declining feed grades.

Refined Market Shows Surplus

Mine tightness does not currently translate to a refined market deficit. International Copper Study Group data show refined production rose by 2.4 percent in the first half. Apparent use gained 2.3 percent during the same period. This left a preliminary surplus of 131,000 tonnes. Adjusting for changes in Chinese bonded stocks reduces the surplus to 98,000 tonnes. The location of stored copper has become a critical factor in market dynamics.

US cathode imports surged to a record 223,000 tonnes in July. This compares to a typical pre-2024 July range of 37,000 to 80,000 tonnes. Traders moved metal into the country ahead of potential tariffs. COMEX inventories rose by 712 percent between February 2025 and August this year. Inventories in London and Shanghai declined during the same period. Expectations of a 50 percent US tariff on refined copper previously drove COMEX prices to a premium of more than 30 percent over London.

Price History Lags Supply Growth

Copper prices rose almost sevenfold between 2000 and 2025. Sprott notes that Chilean mine production increased by only 15 percent over the same period. This disparity highlights the difficulty of converting higher prices into additional tonnes. The discovery pipeline remains slow to replenish. Higher project economics do not compress every stage of development. Miners face structural limits in responding to market signals.