Copper Fundamentals Prevail After Tariff Turmoil

For the latest standardized performance and holdings of the Sprott Copper Miners and Sprott Junior Copper Miners ETFs, please visit the individual website pages COPP and COPJ. Past performance is no guarantee of future results.

Key Takeaways

• Copper Rebounds: U.S. copper prices rose 3.77%, and LME prices gained 3.03%, reflecting renewed investor confidence and synchronized global pricing after refined copper was excluded from U.S. Section 232 tariffs.
• Junior Miners Outperform: The Nasdaq Sprott Junior Copper Miners Index surged 11.13% in August and is up 47.84% year-to-date, significantly outperforming senior miners and broader commodity benchmarks.
• Critical Minerals Upgrade: Copper was added to the U.S. Geological Survey’s draft 2025 Critical Minerals List, potentially accelerating permitting and funding for domestic mining projects, while executive orders streamline regulatory processes.
• Tariff Whiplash: July’s Section 232 tariff announcement caused COMEX copper to spike to a 30% premium over LME, which collapsed after refined copper was exempted. 
• Rising Investment Momentum: Copper miners are showing healthy margins and investment interest is rising, exemplified by Mitsubishi’s $600M stake in Hudbay’s Copper World project.

Performance as of August 31, 2025
Average Annual Total Returns*

*Performance for periods under one year is not annualized.
Source: Bloomberg as of 08/31/2025. You cannot invest directly in an index. Past performance is no guarantee of future results.

Performance Overview: Copper’s Strategic Surge

Copper showed notable strength in August, with strong price gains for both physical copper and copper mining equities reflecting renewed investor confidence and growing policy support. Copper continues to benefit from its central role in electrification, data infrastructure and strategic resource planning. Recent developments in monetary policy, trade dynamics and critical mineral classifications have reinforced copper’s positioning as a key beneficiary of long-term structural shifts.

Spot prices rose 3.77% in the U.S. and 3.03% on the LME (London Metal Exchange), returning to synchronized global pricing after refined copper was excluded from U.S. Section 232⁷  tariffs. The removal of refined copper (including raw copper, anodes, cathodes and scrap) from the tariff framework led to the rapid unwinding of regional premiums. This helped realign U.S. copper prices with global benchmarks and shift market focus toward physical fundamentals. However, 50% tariffs are still being imposed on certain copper products, such as semi-finished copper products like pipes, wires and sheets, and copper-intensive derivative imports, such as electrical components. The Trump administration’s goal is to increase U.S. domestic production of copper, which currently accounts for approximately 50% of its needs.⁸

Copper miners surged 12% in August, outpacing the physical metal.

A weakening U.S. dollar added further support. Since copper is priced in U.S. dollars, a decline in the dollar improves copper’s relative affordability and tends to lift prices. The dollar has been pressured by expectations of a September interest rate cut, dovish⁹ signals from central banks globally and political efforts to influence monetary policy. The U.S. Geological Survey’s (USGS) inclusion of copper in its draft 2025 List of Critical Minerals adds policy momentum. While copper was already included in other strategic USGS lists, this new classification may accelerate permitting timelines for domestic mining projects, which have historically faced delays in the U.S.

Copper mining equities outshone the red metal in August, gaining 12.41%, while junior miners rose 11.13%.^2,3 Year-to-date, junior copper miners maintain a commanding lead, up 47.84% compared to 18.92% for seniors. U.S.-focused juniors have benefited from executive orders aimed at streamlining permitting and that support U.S. domestic mining, increasing the likelihood of future production milestones.

Operationally, copper miners continued to deliver in August. Earnings results were positive, margins improved, and the benefits of higher copper prices were evident across the sector. August was a standout month for critical materials broadly, with copper at the forefront of both policy momentum and market performance.

Looking at longer-term performance, copper and copper miners have meaningfully outpaced equities and broader commodity benchmarks over the past five years (Figure 1).

Figure 1. Physical Copper and Copper Stocks Have Outperformed Other Asset Classes Over the Past Five Years (8/31/2020-8/31/2025)

Source: Bloomberg and Sprott Asset Management. Data as of 08/31/2025. Copper Miners are measured by the Nasdaq Sprott Copper Miners™ Index (NSCOPPT index); U.S. Equities are measured by the S&P 500 TR Index; the Copper Spot Price is measured by LMCADY Comdty; and Commodities are measured by the Bloomberg Commodity Index (BCOM). Definitions of the indices are provided in the footnotes. You cannot invest directly in an index. Included for illustrative purposes only. Past performance is no guarantee of future results.

Market Drivers

Tariff Turbulence and Strategic Repositioning

August marked a sharp reversal following July’s record-setting U.S. copper premium. On July 31, the administration clarified that refined copper would be exempt from Section 232 tariffs, prompting a rapid reconvergence in global pricing. This followed the initial July 8 announcement of a 50% tariff on copper products under Section 232—a national security review process intended to protect domestic industries—which markets had widely interpreted as including refined copper.

July’s policy shock triggered a dramatic spike in U.S. copper prices. The COMEX benchmark surged to a premium of over 30% relative to the LME, far above its historical five-year average of less than 1%. The spread between U.S. and LME-priced copper became one of the most profitable commodity arbitrage trades in recent history, as traders rushed to capitalize on the anticipated dislocation.

On July 30, the White House clarified that refined copper would be excluded from the tariff.¹⁰ This reversal led to a record one-day collapse in the COMEX price, which fell 22%, from $5.59 per pound to $4.35, and erased the arbitrage spread entirely. Pricing has reconverged, and the market is now reorienting around physical fundamentals rather than policy speculation.

Policy volatility highlighted copper’s strategic role, yet long-term investment drivers continue to anchor demand.

While the exemption removed a short-term boost for U.S. copper prices, it did not eliminate the broader policy risk. The Trump administration maintained a 50% duty on copper semi-finished and copper-intensive derivative products, and the exemption for refined copper is temporary. The Secretary of Commerce to the President of the U.S. recommended a “phased universal tariff” of 15% to take effect in 2027, increasing to 30% in 2028. This timeline preserves optionality for future stockpiling and incentivizes domestic production. The decision to exclude refined copper while maintaining pressure on semis suggests a tactical approach, balancing inflation concerns with the strategic imperative to secure critical minerals.

The evolving tariff framework reflects copper’s growing role as a strategic resource. Given the supply deficit, material entering the U.S. or China is increasingly retained, and depleted inventories may not be easy to replace. Copper shipped into the U.S. ahead of the expected tariffs now sits in CME (Chicago Mercantile Exchange) warehouses, while ex-U.S. markets continue to experience tightness. These shifts fragment global inventory systems and distort availability, reinforcing copper’s role in national resource planning and contributing to a cycle of scarcity.

The U.S. has also mandated that 25% of domestically produced high-quality copper scrap remain in the country starting in 2027. This policy is designed to bolster domestic supply security but adds further pressure to global copper scrap markets, given that the U.S. is the world’s largest exporter of copper scrap. These shifts contribute to the fragmentation of copper trade flows and intensify competition in securing the metal.

Despite the short-term volatility, copper’s long-term investment case remains intact. Demand continues to build across strategically important sectors, including artificial intelligence (AI), defense and the electrification megatrend. These structural shifts require sustained copper supply growth.

On the supply side, the industry faces persistent headwinds. Ore grades continue to decline, mining permit timelines remain long, and capital investment has lagged. Full-year mining growth is expected to be the weakest since 2019, with some major producers reporting sharper contractions in production than anticipated. To close the projected supply gap over the next decade, Benchmark Mineral notes that the market will require investment equivalent to developing more than 100 new medium-sized mines.

While the short-term premium has collapsed, we believe the price remains well supported on a fundamental basis. The market is recalibrating, and copper’s strategic positioning continues to deepen.

Figure 2. U.S. Copper (COMEX) Hits a Record Premium Over LME (2020-2025)

Source: Bloomberg. Data as of 08/31/2025. COMEX Copper is represented by the front-month standardized contract on the CME, ticker HG1. LME Copper is represented by the LME Copper 3 Month Rolling Forward, Bloomberg ticker LMCADS03.

Copper Gains Critical Mineral Status

Copper’s inclusion in the draft U.S. critical minerals list marks a pivotal shift in prioritizing the metal for national resource planning. Typically updated every three years, this designation can make copper projects eligible for federal funding, streamline permitting and improve competitiveness by imposing fees on imports. These benefits are especially meaningful for junior miners and new domestic projects, helping to lower barriers and accelerate development.

Recent executive orders have further strengthened the policy environment for U.S. mining, targeting regulatory bottlenecks and unlocking government-backed financing. These directives are designed to expedite permitting timelines and support the buildout of domestic supply chains, directly benefiting copper miners with U.S.-based assets and near-term production potential.

Copper’s status as a critical mineral provides powerful tailwinds.

Copper’s momentum is global. The metal is now recognized as a critical mineral by the European Union, Canada, Japan, China and other major economies. This international alignment reflects copper’s foundational role in electrification, grid modernization and advanced manufacturing, and is driving coordinated policy support for mining and processing capacity worldwide.

As governments move to secure their critical minerals supply chains, copper miners may benefit from these tailwinds (improved access to funding, faster project development and greater market visibility). 

Copper Miners and Financial Momentum

Copper mining is attracting fresh capital as industrial buyers move to secure long-term supply. In August, Hudbay Minerals announced a $600 million investment by Mitsubishi Corporation, granting Mitsubishi a 30% interest in the Copper World project.¹¹ The deal marks a notable change in how copper projects are financed, where downstream participants may invest directly in production assets.

This upstream investment reflects a growing urgency to lock in future supply amid rising demand. The Copper World partnership is emblematic of this trend, with capital flowing toward projects that offer scalability, jurisdictional stability, and alignment with long-duration consumption patterns.

Copper miners are delivering both operational strength and strategic relevance.

Copper miners are also delivering on the operational front. Higher copper prices are expanding margins across the sector in earnings reports. Copper miners’ all-in sustaining cost (AISC) is forecasted at $2.37 per pound for 2025, well below the month-end copper spot price of $4.46 (Figure 3). This implies a healthy AISC margin of 47%. 

This means miners capture nearly half the market price as profit for every pound of copper produced after covering all sustaining costs. Further increases in the copper spot price may improve earnings and provide equity growth.

Together, these developments point to a copper mining sector that is attracting long-term capital, delivering operational performance, and aligning with the broader resource transition. We believe that despite the tariff turbulence, the investment case is increasingly grounded in fundamentals such as price leverage and the ability to meet rising demand from structurally important sectors.

Figure 3. Copper Miners’ Healthy Profitability (2018-2025F)

Source: As of 8/31/2025. Based on the LME copper price. S&P Global Market Intelligence. AISC is “all-in sustaining cost.” 2025 AISC is forecasted by S&P, and the copper price is the average YTD.

Looking Ahead

Several upcoming macro and policy catalysts support copper’s outlook. The Federal Reserve’s rate decision on September 17 is a key event, with any move toward rate cuts likely to boost sentiment for the U.S. economy and support copper prices by lowering the U.S. dollar and stimulating investment in sectors tied to copper demand. Recent dovish signals from central banks and growing expectations for monetary easing have already contributed to copper’s strength, and further policy accommodation could reinforce this trend.

Copper’s outlook is supported by dovish monetary policy and critical minerals momentum.

The extension of the U.S.-China tariff pause, now set to expire on November 10, remains the most immediate factor stabilizing demand expectations and maintaining the current trade framework. Looking further ahead, the scheduled tariff increases on refined copper, 15% in 2027 and 30% in 2028, will be important to monitor for their impact on global flows and regional pricing. The Section 232 investigation on critical minerals continues to influence the regulatory environment, reinforcing copper’s strategic importance in national resource planning.

Several market signals will be important to watch as these policy developments unfold. Persistent negative spot treatment charges, where smelters are now paying miners to process their ore, and low inventory levels across major exchanges both reflect ongoing supply tightness. These indicators, combined with structural drivers such as defense, electric vehicles, AI data centers, clean energy and electrification, underpin robust long-term demand and position copper for further gains as new catalysts emerge.

Figure 4. Copper Supply and Demand Imbalance Likely to Grow (2023-2050E)

Source: BloombergNEF Transition Metals Outlook 2024. The line represents demand, and the shaded area represents supply. Demand is based on a net-zero scenario, i.e., global net-zero emissions by 2050 to meet the goals of the Paris Agreement.

Footnotes