IEA Copper Supply Warning: Acid Shortage Threatens 2.7 Million Tonnes of Leached Output in the DRC and Chile

The International Energy Agency says the short- and medium-term copper supply outlook "appears to have worsened considerably" because constraints on sulphuric acid put solvent extraction-electrowinning (SX-EW) production at risk (MINING.COM; IEA Global Critical Minerals Outlook 2026). Over 15% of global primary copper is made this way; the DRC, where almost 45% of output depends on acid leaching, and Chile are most exposed, with roughly 1.5 million and 1.2 million tonnes of leached output respectively (MINING.COM).

The IEA's revised projections show a deterioration in the short- and medium-term prospects for copper, even as the long-term project pipeline shows modest improvement. The immediate problem is a shortage of sulphuric acid, a critical, often overlooked reagent essential for a substantial portion of global refined copper production. This chemical bottleneck, exacerbated by China's ban on exports and escalating tensions in the Middle East threatening sulphur supplies, places millions of tonnes of copper production in regions like the Democratic Republic of Congo (DRC) and Chile at high risk. With copper prices already experiencing significant upward pressure, this supply squeeze threatens the timely rollout of energy infrastructure, electric vehicles (EVs) and data centres.

The Unfolding Crisis: Sulphuric Acid and Geopolitical Fault Lines

The IEA's warning underscores a precarious vulnerability within the global copper supply chain: its reliance on sulphuric acid. Over 15% of global primary copper output is produced via leaching, solvent extraction, and electrowinning (SX-EW), a process that directly converts acid-leached ore into finished cathode at the mine site. This method is particularly prevalent in regions like the DRC, where nearly 45% of copper production depends on sulphuric acid leaching, and Chile, a global copper powerhouse already grappling with acid supply issues. The IEA estimates that approximately 1.5 million tonnes of DRC's leached output and 1.2 million tonnes from Chile are highly exposed to this shortage.

The current sulphuric acid crisis is a direct consequence of geopolitical events. The effective closure of the Strait of Hormuz in February choked off about half of the global seaborne sulphur trade, a key feedstock for sulphuric acid, originating from Gulf countries and Iran, which collectively account for a quarter of the world's sulphur supply. Compounding this disruption, China implemented a ban on sulphuric acid exports from May until the end of the year, cutting off almost a quarter of ex-China acid needs. For an average SX-EW facility acid is about 13% of costs, rising to 20% in the DRC, and some producers' sulphur or acid inventories are reportedly down to 30 to 60 days (MINING.COM). The market's traditional focus on copper payables, treatment charges, and refining charges is now shifting, with the sulphur component, historically viewed as a penalty risk, acquiring measurable market value within copper smelting economics.

For investors, this situation introduces a new layer of complexity and risk assessment. Mines heavily reliant on SX-EW processing in exposed regions face potential production curtailments, impacting their output and profitability. The cost of securing sulphuric acid, or the inability to do so, could become a significant determinant of operational viability. This scenario could lead to increased operational costs, project delays, and even temporary shutdowns, directly affecting the bottom line of mining companies and, by extension, their stock performance. The IEA's outlook suggests that the copper deficit impact in 2026 will be most acutely felt in the rollout of energy infrastructure, where projects may face delays or significantly higher capital expenditures.

Relentless Demand: The Electrification Imperative and New Drivers

While supply faces serious headwinds, demand for copper keeps rising, driven by the global electrification imperative and emerging technological advancements. Copper's exceptional electrical conductivity and durability make it irreplaceable in a multitude of applications crucial for the energy transition. Electric vehicles (EVs), renewable energy systems (solar panels, wind turbines), grid infrastructure, and energy storage systems are all highly copper-intensive.

An electric vehicle, for instance, requires significantly more copper—up to four times that of a conventional internal combustion engine vehicle. As the world decarbonizes, EV adoption is driving a parallel demand for renewable energy installations. Wind turbines and solar panels are substantially more copper-intensive than traditional power plants, creating a compounding effect on demand. A single offshore wind turbine can contain several tonnes of copper in its generator and cabling.

Beyond the energy transition, artificial intelligence (AI) and high-performance computing are adding demand for copper-heavy power and cooling systems in data centres. This demand is particularly significant because it is considered price-inelastic; copper typically accounts for less than 0.5% of total project costs for these critical infrastructures, meaning demand will persist even with higher prices.

The market was already tight: disruptions wiped out 1.5 million tonnes, over 6% of global mined supply, in 2025 and tipped the refined market into deficit, including the September 2025 mudflow at Grasberg and flooding at Kamoa-Kakula (MINING.COM). Longer term, the IEA projects primary copper supply will fall about 25% short of requirements in 2035 under today's policies, narrower than the 30% gap in last year's edition (IEA).

Supply-Side Constraints: A Multifaceted Challenge

Meeting this demand is hindered by a multitude of persistent supply-side constraints that extend beyond the immediate sulphuric acid crisis. The copper mining industry faces challenges ranging from declining ore grades to protracted permitting timelines, social and environmental opposition, and a significant investment gap.

One of the most fundamental issues is the gradual decline of ore grades worldwide. High-grade deposits in major producing regions like Chile, Peru, and North America have been extensively exploited, forcing miners to process lower-grade ores. This necessitates moving larger volumes of material for the same amount of copper, increasing energy and water consumption, and generating more waste.

Permitting delays and regulatory hurdles also present significant obstacles. In the United States, for example, the path from discovery to production can take well over a decade. This lengthy process, coupled with increasingly stringent environmental assessment requirements and community consultation mandates, particularly in South American nations like Chile and Peru, significantly delays new project development. Social acceptance hurdles have intensified, with communities demanding greater participation in project benefits and environmental protection, sometimes leading to project suspensions or cancellations.

Indeed, a significant portion of potential copper supply is currently immobilized by Environmental, Social, and Governance (ESG) issues. Unlocking even a fraction of stalled projects could alleviate looming shortages, but requires stronger governance, deeper community engagement, and more sustainable practices.

Furthermore, new copper projects need large investment and long lead times, so projects approved today will take years to deliver output. The IEA says spending by copper-focused companies rose 8% in 2025 even as overall critical mineral investment fell 9% (IEA). This structural underinvestment, coupled with declining ore grades and recurring disruptions, creates a market that is fundamentally tightening.

Implications for Investors and the North American Mining Sector

For investors, the IEA's warning and the broader market dynamics signal a period of sustained volatility and potentially higher copper prices. Copper's role has transformed from a cyclical commodity to a strategic infrastructure material, essential for technological advancement and the energy transition. This shift makes copper demand less price-sensitive in key sectors like grid modernization, which will continue regardless of commodity price fluctuations.

Copper prices topped $12,000 a tonne for the first time in December 2025 and exceeded $14,000 in May 2026, while the annual treatment charge benchmark for 2026 settled at $0 per tonne, the lowest ever agreed (MINING.COM).

In North America, the implications are particularly significant. Both Canada and the United States are seeing rising demand for copper as they aim to bolster domestic supply chains for critical minerals. Companies like Trekor, a leading North American copper producer with operations in British Columbia, Canada, and Arizona, USA, are strategically positioned. Trekor (then Taseko Mines) harvested the first cathodes at its Florence Copper in-situ operation in Arizona in early March 2026, the first new copper production from a greenfield U.S. facility since 2008; nameplate capacity is 85 million pounds a year, and the company marked the onset of commercial production on Oct. 6, 2026 (Taseko/Trekor; Trekor). Similarly, Teck Resources, a major copper producer in the Americas with operations in Canada, Peru, and Chile, is expanding its Highland Valley Copper mine in British Columbia and has a robust development pipeline. Copper Fox Metals, with its significant resource base across British Columbia and Arizona, also highlights the potential for North American production.

However, North American projects are not immune to the challenges. Permitting timelines in the US remain a significant hurdle, and water scarcity is an increasing concern in arid regions like Arizona. Yet, the strategic importance of domestic supply, reinforced by government policies, could accelerate investment and development in the region.

Technological innovation is also playing a crucial role in addressing supply constraints. Advanced exploration technologies, such as those offered by Fleet Space Technologies' ExoSphere, are designed to identify new deposits with minimal environmental disturbance, improving targeting accuracy and reducing the need for extensive drilling. Innovations in processing, such as electrochemical reductive leaching by companies like Still Bright, offer the potential to extract copper more efficiently from lower-grade or complex ores, reducing environmental footprints and energy consumption. Sensor-based ore sorting technologies are also being deployed to increase ore grade control and reduce waste rock, optimizing the use of existing resources.

Recycling will also become increasingly vital. The tightening market and high prices are incentivizing greater recovery from existing stocks. The recycled copper market is projected to grow significantly, driven by electrification and circular economy mandates. However, this segment also faces challenges, including persistent price volatility and supply constraints for scrap.

Navigating the Copper Conundrum

The IEA's warning about the worsening copper supply outlook serves as a critical wake-up call for the mining industry, investors, and policymakers worldwide. The confluence of geopolitical instability impacting critical reagents, steady demand from the energy transition and new technologies like AI, and deep-seated supply-side constraints presents a complex and urgent challenge. The projected deficit has long-term implications for global economic development and climate goals.

For investors, this environment underscores the strategic value of copper assets, particularly those in politically stable regions with strong ESG practices and robust development pipelines. Companies that can navigate the permitting maze, engage effectively with communities, and deploy innovative technologies to enhance recovery and reduce environmental impact will be best positioned to capitalize on the sustained demand and elevated prices. The North American mining sector, with its significant reserves and growing emphasis on domestic supply, stands to play an increasingly important role in mitigating the global copper deficit. However, without concerted efforts to address the multifaceted challenges—from geopolitical risks to environmental and social governance—the "metal of electrification" may well become the bottleneck of the energy transition, potentially slowing the world's progress towards a sustainable future.

Sources

• MINING.COM: Acid test: IEA warns copper supply outlook has 'worsened considerably'
• IEA: Global Critical Minerals Outlook 2026, executive summary
• Taseko (now Trekor Metals): First cathode harvest at Florence Copper (Mar. 2, 2026)
• Trekor Metals: Celebrating Florence Copper grand opening

For more coverage, see the copper hub, Global articles and company profiles.

How we checked this: AI-edited from the sources linked above and checked against them by our AI editor.