Global Copper Industry Unlikely to Face Severe Disruptions Despite Production Interruptions

In 2024, Chile and the DRC contributed approximately 34 percent of the world’s global copper output, producing 5.3 and 3.3 million metric tons, respectively. A nationwide power outage on Feb. 25 disrupted Chile’s copper mining industry, which is primarily located in the northern regions. During the outage, Escondida, the world’s largest copper mine, which accounts for approximately 5 percent of global output, experienced production disruptions. Meanwhile, multiple mines belonging to state-owned Codelco at Chuquicamata, Andina, Salvador, and El Teniente were also left without power; other sites had to use backup generators to operate partially. 

In the short term, severe disruptions to the global copper supply are unlikely as authorities had restored power to Chile by Feb. 26. Although adverse weather and transmission issues continue to threaten the power supply in Chile, the country plans to expand renewable energy to fulfill up to 80 percent of power needs by 2030. This should offset future demand surges driven by increased copper production. 

The ongoing conflict between the M23 rebels and government forces continues to drive insecurity in the DRC. Fighting in the eastern regions of the country likely disrupted mining operations in North and South Kivu, where minerals like coltan, cassiterite, and gold are found. However, no strong evidence suggests that the conflict directly impacted major copper mines, as they are located mainly in the southern Katanga region. However, the knock-on effects of instability in the country could disrupt transport networks and regional infrastructure, which could affect copper exports and logistics. Notably, the Lobito Corridor, an essential trade route connecting the DRC, Angola, and Zambia to global markets, remains generally unaffected by clashes. 

The DRC authorities have also imposed overnight curfews in Lualaba and Haut-Katanga through at least early April. These provinces are part of the DRC’s Katanga Copperbelt and contribute significantly to the DRC’s copper output. A reduction in working hours will further constrain output and potentially affect production yields. 

While the recent US tariffs exempt products such as copper, pharmaceuticals, semiconductors, lumber articles, energy products, and some critical minerals, the possibility of tariffs imposed on such products in the future remains a valid concern. Ultimately, the US would want to find solutions to protect its domestic copper production and address the issues of overcapacity and dumping. In 2024, the US consumed approximately 1.6 million tons of refined copper, out of which close to 800,000 tons were imported from Chile, Canada, and Mexico.

Although the introduction of tariffs on copper in the future would likely boost US domestic production, it would increase the overall cost of production for US industries reliant on copper. Given copper’s critical role in advanced manufacturing and industrial applications, sectors such as electric vehicles, electronics, renewables, military hardware, and semiconductors may face production disruptions due to increased costs, which would likely be passed on to consumers as price increases.

Moreover, key US copper trading partners could also engage in their own retaliatory trade measures. Consequent uncertainties in the global market may also cause copper suppliers to redirect their supplies to other countries, which could lead to an oversupply in markets outside of the US. 

In the short term, a temporary cost increase in copper production is possible due to the ongoing infrastructure issues in Chile and uncertain geopolitical situation in the DRC. However, these issues are unlikely to cause protracted supply chain disruptions. The imposition of US tariffs could prompt major copper exporters to redirect their supply to alternative markets, such as China, India, and the EU. Countries with strong industrial demand, such as China – particularly in its electric vehicle sector – could take advantage of lower prices to secure additional raw materials. In the medium-to-long term, the US could disrupt global copper supply chains via tariffs, potentially impacting manufacturers, accelerating global trade realignment, and encouraging strategic investments in downstream copper-related industries.

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