Global copper demand is projected to rise ~50% from 28 million metric tonnes in 2025 to 42 million in 2040, which would be a CAGR +2.7%. S&P Global estimates incremental demand will come from Electrification (transmission, EVs, grid, motors): 50%, core economic activity: 36%, AI/data centers: 10%, and Defense: 4%.
I strongly believe copper (“Cu“) demand will grow faster than that as NEW uses for Cu are invented and scale up. For instance, humanoid robots and a larger than expected increase in commercial/military drones are things that, collectively, could move the needle next decade.
Readers may be hearing about very strong growth in Battery Energy Storage Systems (“BESS“). 100% of that growth requires cabling, inverters and other critical infrastructure that’s Cu-intensive. Solar farms also require a lot of Cu, and I think solar could surprise to the upside as costs have plummeted.
Where on earth (literally) will new Cu supply come from to meet surging demand? The average time from major discovery to commercial production is widely reported to be ~18 years. By contrast, giant AI data centers & solar power facilities take just 3-5 years to build.
How many times have readers seen the above chart from S&P Global? Even if major new discoveries are made, they would be 18 years from supplying the world’s needs. From 116 discoveries in the 1990s, to 35 in the 2010s, to just 6 from 2020-24.
And, according to ChatGPT, GROK & Claude, zero major Cu discoveries have been announced since 2024. There’s no way around this supply crisis. Increased recycling helps, but can’t bridge the gap.
I believe the U.S. & Canada are two of the best places on earth to develop Cu projects. A company I continue to like is US Copper Corp. (TSX-v: USCU) / (OTC: USCUF), a storied past-producer, with its flagship, 100%-owned, 6,056-acre Moonlight-Superior project in NE California, USA.
Management, led by CEO Dunn, has over C$1M in cash, enough to last through year end. Key initiatives are largely paid for. In my view, if the share price continues to rise, (+31% from the C$0.145 low of May), we could see a capital raise.
Cu is now deemed a critical material in most parts of the world. There are probably a few dozen interesting Cu projects in the U.S. Yet, how many have over 3 billion Cu Eq. pounds (Indicated + Inferred)? Not many. Moonlight also has an estimated 23.1M ounces of silver (“Ag“). That’s a meaningful number with Ag +118% in the past year.
The Company delivered a robust PEA using $4.15/lb. Cu., 38%! below the current $6.66/lb. At $4.15, the post-tax NPV(7%) was ~C$1.5B, but at $6.66 it’s double, ~C$3.2B. Compare that to the Company’s enterprise value of just ~C$27M (C$0.18/shr.). At spot pricing, the Project has ~3.2B Cu Eq. lbs. (~91.5% Cu, ~8.5% Ag).
Note: Moonlight’s 0.31% Cu grade is low compared to most S. American mines/projects, but in B.C. Canada, Teck Resources mines 0.25-0.28% Cu, Hudbay Minerals ~0.24-25%, and Taseko Mines ~0.23-24%. In Arizona, Freeport operates at 0.20-0.35% Cu., and Rio Tinto is earning into a project in Nevada with a grade of 0.18% Cu.
In US Copper’s corporate presentation, slide #15, is a table of eight Cu deposits in the U.S., (owned by juniors), with greater than 1M tonnes contained Cu. Two interesting names in the table, Gunnison (backed by Rio Tinto) & Faraday Copper (backed by Lundin Group), have an average market cap of C$990M. Granted, they have more in-situ Cu, but US Copper is valued at < 3% of C$990M.
Are these two projects more advanced than US Copper’s Moonlight? No, both are also at PEA-stage. Other names on the list? Ivanhoe Electric is controlled by Cu mining legend Robert Friedland, the most important Cu pundit on earth, and major Saudi Arabian mining company Ma’aden.
HudBay just acquired Arizona Sonoran for its large, high-grade, PFS-stage project, paying ~C$0.13/lb. By contrast, US Copper is valued at ~C$0.008/Cu Eq. lb. Lion Copper’s market cap is C$147M, it too is backed by Rio.
Highland Copper is meaningfully supported by Orion Mine Finance & Osisko Gold Royalties. It’s valued at ~C$124M. US Copper is valued at ~C$27M.
Other giant & large players in the western U.S. include; BHP, Freeport McMoran, Antofagasta plc, Glencore, Grupo Mexico/Southern Copper, Sumitomo, Mitsui, Mitsubishi Corp., Marubeni Corp. ITOCHU Corp., KGHM Polska, and Capstone Mining. Last week Teck Resources announced a U.S., Cu-focused, JV to make acquisitions & investments.
Readers are reminded that Newmont & Barrick Mining now have substantial copper endowments, and royalty companies like Wheaton Precious Metals, Franco-Nevada and Royal Gold have mostly precious metals, (but growing Cu exposure) via deals with juniors in the U.S.
What’s my point in named-dropping so many companies? How many juniors have 3.2 billion pounds Cu Eq. in the U.S., WITH NO STRATEGIC BACKING (yet)?!?
Although it might be 2027 before US Copper secures a partner, I see no reason for it not happening. Most of the players listed above in red are well aware of US Copper’s Moonlight-Superior.
Moonlight is located ~100 miles NW of Reno, Nevada. There’s ample regional infrastructure in place. The Project is comprised of 36 patented claims + 330 federal claims over 10 sq. miles.
It’s in a rural county with a long history of logging & mining. Therefore, local support is considered to be positive. State Highway 89 and a rail connection are both within 7 miles, and a power line is 2 miles away. A deep water port in Sacramento is 150 miles to the SW.
Many readers have questions about the ability of California mining projects to get permits & approvals. Certain counties and a few case-specific situations (dating back many years) showcased meaningful challenges (long delays or rejections).
However, in the past few years things have changed for the better, and the current U.S. Administration is the most favorable for California and for the entire country in decades. To be clear, Moonlight is on Federal lands, a very good thing given the current Administration.
For those who remain skeptical about California, do you think that companies like Freeport & Glencore, with major operations in Indonesia, and the DRC (Africa) would be afraid to enter California?!? Two of the top emerging countries for Cu production outside of S. America are; Zambia & Mongolia. I prefer California…
The following table shows numerous companies, (explorers, developers & producers) with gold, silver, copper, zinc, lithium, REE assets in California that have made good progress in the State in the past year. This doesn’t include oil/gas or cement/aggregates companies.
California is open for metals/mining…
Geopolitically, the West vs. China/Russia/Iran has taken a horrible turn, with no (clear) end in sight. Being largely shut out of N. America, China’s buying all the assets it can across Africa & S. America. To say US Copper is ideally positioned in the USA is a gross understatement.
In my view, if Moonlight were 60 miles to the east, in Nevada, or in Arizona instead of California, it might be valued A LOT higher… But, therein lies the potential for a re-rate in the coming months.
To reiterate, the world is an increasingly dangerous & uncertain place! Risks are everywhere, many can’t be avoided. In my opinion, the RELATIVE risk of California (permitting) to all other known + unknown risks globally, is fairly low.
US Copper offers a compelling risk/reward proposition –> 3.2 billion Cu Eq. pounds in the USA, valued at less than 1% of its post-tax NPV(7%)(at spot pricing). The Moonlight project is one of just eight meaningful Cu projects, owned by juniors, in the U.S. All roads point to the U.S. for M&A.
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