The New Metals Standard: Volume III - Copper

27/10/25

Preface

Copper completes the circuit.

Where gold anchors monetary trust and silver bridges currency with industry, copper carries production itself, the medium through which energy and policy flow. Keynes’ definition of wealth as what can be produced rather than held - fits well with copper as it embodies that idea of a material mined, melted, and moulded into use.

Copper’s Role in the New Standard

Across energy, rare earths, fertilisers, and semiconductors, scarcity is increasingly deliberate. Copper sits between that managed restraint and structural shortages, deepened by U.S. trade realignment and the drive to reshore manufacturing.

Treatment and refining charges have collapsed, forcing miners and traders to reconsider how value is shared. “Virtual tolling” deals now treat smelters as processors, returning refined metal to its owners - migrating value from transformation to the control of movement. Even as their commercial margins compress, smelters have become strategic assets. The ability to refine, not just extract, now defines industrial sovereignty. Nations are beginning to follow China’s model: control the smelters, control the flow. Australia’s recent A$135 million commitment to sustain domestic refining reflects this realignment - in the age of constrained trade, processing capacity is fundamental to resource security.

Mine disruptions reinforce the squeeze. Freeport’s Grasberg, second only to Escondida, will lose about 600 kt through 2026. Chilean output has softened, and inventories are thin. Prices above $11,000 /t should not be presumed to initiate a significant increase in production.

China’s imports confirm the imbalance: refined inflows up 22 % in September, concentrates down 6 %, scrap up 15 %. Refined metal is being stockpiled while feedstock availability tightens, and recycling is shifting from the margins to structural significance.

Policy is now reflecting these realities - The United States plans to list copper as a critical mineral, placing it beside silver, potash, silicon, rhenium, and lead. The move formalises what markets have already begun to imply. Projects in mining, refining, and recycling will draw priority permitting and fiscal support; investors now read copper exposure as national capacity.

Market Architecture: Futures and Flow

The LME, COMEX, and SHFE together form a tri-market lens on copper, linking capital to production and finance to industry.

The LME anchors physical trade through its deliverable tonnage and standardized contract structure, serving as the global reference for spot and forward pricing. Its warehousing network, though limited in available tonnage, remains the institutional bridge between paper and physical copper, a neutral, duty-unpaid system unbound by national taxation or delivery constraints. LME copper stocks currently total about 135 kt, of which 126 kt are on-warrant and 10 kt cancelled for load-out. Almost 90 percent sits in Asia, concentrated in Taiwan (53 kt) and South Korea (49 kt), with smaller parcels in Singapore and Hong Kong. Europe holds 17 kt, and the Americas none. Adding roughly 29 kt of off-warrant material brings total visible LME-linked inventory to around 165 kt, less than ten days of global consumption. The exchange’s footprint may be regionally narrow, but its price discovery role remains global: a small visible base anchoring a far larger flow of trade and finance.

COMEX reflects a blend of financial positioning, macro sentiment, and policy expectation. The shape of its forward curve has allowed much of the copper moved into U.S. warehouses during tariff uncertainty to remain there with limited cost pressure, effectively supporting storage. Inventories have risen to about 347,500 short tons, the largest among the three exchanges, underscoring COMEX’s role as the financial reservoir of copper.

SHFE completes the framework, representing China’s visible inventory base, currently around 110 kt, and near-term demand pulse, the domestic counterpart to the international flows represented on the LME.

The three exchanges describe a system physically lean yet financially deep, where storage, policy, and price continuously interact.

Copper in Equity Form

Copper represents the most integrated expression of the Futures + Productive Asset model within The New Metals Standard. Its dual identity, both financial benchmark and industrial necessity, requires exposure that connects derivative structure with productive capacity.

Forward Derivatives or Futures-based instruments such as the WisdomTree Copper ETC (COPA:L) and the United States Copper Index Fund (CPER:US) provide efficient, collateralised access to copper’s price curve. COPA tracks the Bloomberg Copper Subindex, while CPER follows the SummerHaven Copper Index, which seeks to optimise contract selection along the COMEX curve.

Beneath this derivative layer lies the equity dimension, capturing the economics of production, logistics, and regional risk. The Global X Copper Miners ETF (COPX:US) remains the most established vehicle, holding a global portfolio of 40 to 50 copper-focused companies across Chile, Peru, Australia, and China. The iShares Copper and Metals Mining ETF (ICOP:US) broadens this exposure to include diversified metal miners through the STOXX Global Copper and Metals Mining Index, offering a lower-cost entry point and slightly diluted copper purity. Together, they bridge the industrial and financial narratives, one focused on concentration, the other on diversification.

Large-cap producers form the structural core of the copper equity sleeve. Freeport-McMoRan (FCX:US) remains the sector’s bellwether, combining deep U.S. operations with the world-class Grasberg district in Indonesia. Southern Copper Corporation (SCCO:US), integrated from mine to smelter, provides high-grade exposure to the Americas, anchored in Peru and Mexico. Antofagasta (ANTO:L), London-listed and Chilean-based, adds South American leverage with strong operational transparency, while Zijin Mining Group (ZIJMF:US) introduces Chinese and frontier-market diversification through assets in Serbia, Peru, and the DRC. These holdings reflect the geography of copper supply: diversified extraction, concentrated processing, and asymmetric policy exposure.

At the margin, select junior producers provide optionality on price and discovery. Arizona Sonoran Copper (ASCU:US), advancing its Cactus Project in Arizona, and MAC Copper (MTAL:US), with active Australian operations and recent M&A interest, represent targeted exploration exposure. Taseko Mines (TGB:US) occupies a middle ground between speculative and established, offering production leverage without full-cycle risk.

Illustrative Construct: Example Allocation within the Copper Sleeve

The New Metals Standard – Copper Sleeve combines futures-linked exposure with a diversified equity base. The composition table below is illustrative, showing how the framework can be adapted to express both financial and industrial participation within a single sleeve.

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