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Soaring long-term demand for copper will require as much as US$250bn in investment over the next five years, UN research says, yet analysts warn the mining sector is bracing for a tariff-induced recession. 

Global demand for copper is expected to rise 40% by 2040, driven by digital expansion and clean energy, UN Trade & Development (UNCTAD) says in a report published today. This would require more than 10 million tonnes of additional copper, equivalent to around half of all supply in 2023. 

However, UNCTAD warns the global copper sector “faces mounting pressure from supply limitations, geopolitical uncertainties, increasing trade tensions and declining ore grades”. 

The situation “highlights the urgent need for major investments in new copper mining projects, especially as existing ore grades decline, and supply becomes more constrained” it says, adding that an estimated 80 new mines are needed at a likely cost of US$250bn. 

Attracting funding for new mines has long proven a challenge across many critical minerals, with McKinsey saying in September last year that copper prices would need to increase by 20% to incentivise the level of investment required. 

Since then, US President Donald Trump’s tariff regime has added to concerns in the sector. 

In February, Trump ordered an investigation into the copper market, which commodity traders have taken as an indicator that tariffs on imports are incoming. 

As a result, US copper prices jumped to record highs in March – significantly higher than in other jurisdictions – as importers rushed to get ahead of potential levies. The Financial Times reported in late April that China’s copper stockpiles had dwindled rapidly as a result. 

Those tariffs have not yet materialised, but JP Morgan Analysis said last week it expects a levy of at least 10% to be applied to copper imports. At the same time, wider fears of a recession are putting downward pressure on prices. 

“The global growth drag created by US tariffs is likely to be a headwind for prices near term,” says JP Morgan’s head of base metals and precious metals strategy, Gregory Shearer. 

Dominic O’Kane, head of Emea mining and metals research at JP Morgan, adds: “The mining sector is already pricing in a recession scenario. 

“The MSCI World Metals and Mining Index is down around 50% since January 2023 – however, we’re not at trough. There is still so much uncertainty around tariffs and geopolitical risks, against a backdrop of a weakening dollar and rising inflation.” 

The UNCTAD report says these pressures have emerged during a period of “profound geopolitical realignment” in copper supply chains. 

China has grown its processing capacity dramatically over the last two decades to become the world’s leading producer of refined copper, accounting for 45% of global output in 2023. 

Yet the Americas have experienced a “steep decline” over the same period, with their market share falling from 39% in 1990 to 15% two years ago. Europe’s share has dropped from 32% to 14% over the same period, the report says. 

Chile, Australia, Peru, DR Congo and Russia together hold more than half of the world’s copper reserves, but account for a far smaller share of refining capacity. DR Congo in particular has rapidly increased its mining production and benefits from high-grade reserves. 

UNCTAD says that alongside the development of new mines, policymakers should support producing nations’ efforts to increase domestic processing, enabling them to “capture greater value and enhance their role in the global supply chain”, it says. 

“Enhancing value through domestic processing can also strengthen key macroeconomic indicators,” UNCTAD adds. “By investing in downstream processing and manufacturing capabilities, these countries can boost their global competitiveness and reduce reliance on raw material exports.” 

Tariff escalation, however, “reinforces global value chain asymmetries, entrenching the role of developing economies as suppliers of raw materials while limiting their participation in higher-value manufacturing”, it says.