Current Market Dynamics and Demand Drivers

AI-Driven Data Centers

The rapid expansion of AI-focused data centers is emerging as a major Copper demand catalyst. Global data center capacity is forecast to more than triple from about 60 GW in 2023 to 171–219 GW by 2030, with an upside scenario reaching 298 GW^[1]. Crucially, around 70% of this growth will come from facilities built to support advanced AI workloads, which are far more Copper-intensive than traditional cloud centers. High-performance AI data centers have elevated power densities (new racks drawing up to 120 kW each, versus ~5–10 kW in standard centers) and therefore require substantially more Copper in power cables, busbars, and cooling systems.

Each megawatt (MW) of AI data center capacity can contain an enormous quantity of Copper. A study of Microsoft’s $500 million Chicago data center found it used 2,177 tons of Copper, equating to roughly 27 tones of Copper per MW^[2].

This surging demand from AI infrastructure is a pivotal driver in Copper’s bullish outlook.

Energy Transition & Electrification

The broader electrification mega-trend will significantly lift Copper consumption across multiple sectors.

EVs are essentially “Copper on wheels,” containing 50–80 kg of Copper each—3 to 4 times more than conventional gasoline vehicles. Additionally, EV charging infrastructure is Copper-intensive, with fast chargers using up to 8 kg of Copper in cables and transformers. Copper demand for EVs and charging infrastructure alone will reach 4.7 Mt by 2030, rising further to 5.5 Mt by 2035^[3].

Copper is also essential to renewable energy technologies, extensively used in solar panels, wind turbines, and energy storage systems. A typical onshore wind turbine contains approximately 4 to 5 tons of Copper, and offshore turbines require even more due to extensive cable runs. Furthermore, upgrading electric grids is Copper-intensive, with extensive use in power cables, transformers, and substations.

By 2030, Copper demand from grid upgrades and renewable infrastructure is expected to reach 9–10 Mt annually, nearly doubling from 5 Mt in 2020.

[1] AI data center growth: Meeting the demand | McKinsey
[2] Why AI tools and data centers are driving Copper demand
[3] Global Copper demand to rise 20% by 2035 | S&P Global

Copper Supply Constraints

On the supply side, the Copper mining industry faces structural challenges in meeting this burgeoning demand. A key issue is the declining ore grades at many major mines, which is steadily eroding production efficiency. High-grade oxide ore deposits which are easier to process have been largely depleted, forcing miners to exploit lower-grade sulfide ores that yield less Copper per ton of rock. As a result, even maintaining current output requires mining and milling ever-increasing volumes of ore. Over the past decade, the volume of ore processed globally has risen by 44% – an additional 1.1 billion tons of ore each year – just to keep Copper production steady. This is a monumental challenge, given the technical, energy, and environmental burdens of moving so much rock.

Concrete examples illustrate the issue. Escondida in Chile, the world’s largest Copper mine, began production in the 1990s with extraordinarily rich ore at around 2.5 to 3% Copper. Today, Escondida’s remaining ore averages only about 1.0% Copper or even less. Inevitably, Escondida’s Copper output is set to drop where BHP projects a ~300,000-ton annual production decline by the end of the decade even after spending an estimated $10–14 billion in the next 10 years to sustain its Chilean mines^[4]. Many other giant mines are in a similar position: Grasberg in Indonesia, Chuquicamata and El Teniente in Chile, and Red Dog in the U.S. (among others) have all seen head grades slip, requiring major expansions just to prevent steep output falls. This means miners must expend significantly more effort and cost for each ton of Copper produced, leading to a higher marginal cost of supply over time.

Shortfalls at flagship projects underscore the risk that supply will undershoot expectations All told, the combination of declining grades and operational hurdles suggests that even maintaining current global production (~22–23 Mt mined Copper) is becoming harder each year, let alone boosting output to 30+ Mt.

[4] Declining ore grades jeopardize the mining industry’s sustainability | Rough Polished

Project Delays and Production Bottlenecks

Bringing new Copper projects online fast enough is another major bottleneck. The industry has a notoriously long lead time to develop mines – often 15+ years from discovery to production. In the 2010s, low prices led to underinvestment in exploration and project pipelines. Now, as demand projections climb, there is a scramble to revive and fund projects, but many are hitting permitting or execution roadblocks. For example, Teck Resources’ big expansion in Chile, Quebrada Blanca Phase 2, was originally slated for 2023 but is now two years behind schedule and around $4 billion over budget, with full output not expected until late 2025.

Meanwhile, U.S. and Canada Copper production has been constrained by permitting difficulties and community opposition. The both countries possesses rich undeveloped Copper deposits, but converting these into mines has proven extremely difficult under strict environmental regulations. A case in point is the proposed Pebble Mine in Alaska – one of the world’s largest undeveloped Copper-gold resources – which the U.S. EPA effectively blocked in 2023 due to concerns over salmon ecosystems^[5]. This is despite Pebble’s Copper being potentially strategic for the energy transition. The EPA’s decision demonstrates how environmental protections often override supply expansion, even as demand for “green” metals rises. Similarly, the long-delayed Resolution Copper project in Arizona remains mired in permitting challenges largely over Native American sacred land and water impacts.

The cumulative impact of these production headwinds is stark: even as demand marches upward, supply is struggling to keep pace. McKinsey projects that based on mines currently under development and probable expansions, 2023 supply of ~25 Mt might only reach ~30.1 Mt by 2031, leaving an annual gap of 6.5 Mt versus demand of ~36.6 Mt^[6]

Such deficits are unprecedented for a major industrial commodity and signal a severe supply crunch unless constraints are addressed.

[5] U.S. EPA to block Pebble Mine Copper/gold mine project in Alaska | Reuters
[6] Copper-processing technologies: Growing global Copper supply | McKinsey

Copper Price Outlook

Given the robust demand drivers, and supply constraints, we alongside many market experts foresee a strong upward trajectory for Copper prices in the coming years. The consensus is that significantly higher prices will be required to incentivize the new supply investments needed – and those higher prices also translate to attractive returns for Copper investors.

Goldman Sachs and BlackRock, among others, have publicly stated that they see incentive prices for new Copper projects at $5.50+ per pound – again around $12,000 per ton or higher. Goldman famously called Copper “the new oil” in 2021 and predicted a sustained bull market. Despite Copper’s brief pullback in 2024, Goldman reaffirmed its bullish stance, projecting new record highs in the coming years. BlackRock’s strategists likewise view Copper as one of the highest-conviction long-term plays, citing chronic under-supply. These firms point out that at prices below ~$4/lb, mining companies struggle to justify building multi-billion-dollar mines that might take 10+ years to pay back.

Overall, expert sentiment is that Copper is entering a multi-year bull market. The combination of secular demand growth and inelastic supply is a textbook recipe for higher prices. While short-term fluctuations will occur (often tied to China’s economy or global interest rate moves), the long-term price trend is expected to be upward. Notably, even at $12,000/ton, Copper would only be ~33% above current levels– a reflection of how moderate price increases can unleash big changes. From an investment standpoint, the possibility of, say, a 50–100% price increase by 2030 provides substantial upside, especially for equity plays like Copper miners which offer leveraged exposure.

Executive Summary

At Nicola Mining Inc., we believe Copper is uniquely positioned at the intersection of two transformative global megatrends: the rapid expansion of AI infrastructure and the worldwide shift toward electrification and sustainable energy solutions. The accelerated buildout of AI-driven data centers is expected to more than triple global data center capacity by 2030, driving a corresponding surge in Copper demand given the metal’s indispensable role in electrical and cooling systems essential to AI infrastructure. Similarly, electrification initiatives including EV adoption, renewable energy installations, and extensive grid modernization, are projected to significantly elevate global Copper consumption potentially growing demand by 75% or more by mid-century.

Historically, Copper has consistently facilitated major technological advancements, from the earliest forms of metallurgy to the extensive electrical and digital infrastructure underpinning today’s global economy. Its unparalleled electrical conductivity, durability, and recyclability have secured its role as a cornerstone material through successive industrial revolutions. Yet, even as demand accelerates, Copper supply faces serious structural constraints, including declining ore grades, limited high-quality discoveries, prolonged project development timelines, and geopolitical and regulatory risks, such as recent international trade tensions and tariffs impacting aluminum—a potential substitute metal. These cumulative factors indicate substantial future supply deficits.

In summary, Copper’s fundamental role in enabling global sustainability goals and AI-driven technological advancements, coupled with structural supply limitations, makes it one of the most compelling investment themes in the mining and commodities space today.

Disclaimer

This publication is provided for informational purposes only and does not constitute financial, investment, legal, or other professional advice. The views and opinions expressed herein regarding the Copper market, including but not limited to market trends, supply and demand outlooks, and industry developments, are based solely on publicly available data and internal analysis by Nicola Mining Inc. (“the Company”) as of the date of publication. Such information is subject to change without notice, and the Company undertakes no obligation to update any forward-looking statements or analyses.

This document does not include, imply, or provide any specific price forecasts, price targets, or recommendations regarding buying, selling, or holding securities or commodities. Readers should not rely on this material as a prediction of future Copper prices or market performance.

The Company expressly disclaims any and all liability arising from or related to the use, interpretation, reliance upon, or decisions made based on this publication. Readers are encouraged to seek independent professional advice before making investment or business decisions.

Forward-looking statements inherently involve risks, uncertainties, and assumptions. Actual results may differ materially due to a variety of factors including, but not limited to, changes in global economic conditions, regulatory and geopolitical developments, operational risks, technological advances, competitive pressures, and fluctuations in commodities markets. The Company undertakes no obligation to update any forward-looking statements contained herein to reflect future events, new information, or changing circumstances.

By reading this publication, you acknowledge that you have read and understood this disclaimer and agree that the Company shall not be responsible or liable for any decisions or actions taken based upon the information contained herein.

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