Copper's Investment Case Rewired

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March 13, 2026 | (6 mins 42 secs)

It's time to think differently about "Dr. Copper." Steve Schoffstall joins Asset TV's ETF Editor-in-Chief Kristen Myers to discuss how copper's role is shifting from a construction material to a critical enabler of AI, electrification and the modern economy. See how supply constraints, policy pressures and geopolitics could shape what comes next.

Video Transcript

Kristen Myers: Thank you for tuning in to Asset TV. I'm Kristen Myers, ETF Editor-in-Chief, and I'm so excited to be joined by Steve Schoffstall, Managing Partner and Head of ETFs at Sprott. Steve, thanks so much for joining us today.

Steve Schoffstall: It's great to be here. Thank you.

Kristen Myers: I want to first ask you about this recent decision from the U.S. Geological Survey. They decided to add copper to its list of critical minerals. Can you talk to us about the impact of that decision?

Steve Schoffstall: This was a change that they made back in November of last year. What that really shows is how important copper is from a national and economic security perspective. With that, the government can set policy on permitting. We're also seeing, in some cases, that the U.S. government, through various agencies, is taking positions in different critical materials miners, including copper, and is looking to help build a road in Alaska for Trilogy Metals so they can begin mining copper.

But it really comes down to having a domestic supply of copper and other critical materials. With that, it's about building out mining and the whole supply chain capacity here in the U.S.

Kristen Myers: Interestingly, this decision was made because of the recent geopolitical tensions that we have seen. How is that shaping the copper market right now?

Steve Schoffstall: It's having a huge impact, if you think from a national defense perspective. If you look at national defense spending over the last six or seven years, it has risen to more than $2.6 trillion globally. We're seeing very significant investment across the board. Just last year, NATO agreed to increase defense spending from 2% of GDP to 5% of GDP.

That's been just one aspect that's driving this. Then the other aspect is that there's no longer the option of having energy security. It's now becoming standard across many Western countries, and we'll continue to see that play out.

Kristen Myers: Talk us through a little bit about your outlook on the supply and demand for copper, given all of those tailwinds that you just mentioned.

Steve Schoffstall: On the supply side, we're seeing many new structural changes in the market. Historically, the copper market sees demand double about every 25 years. Now, at the same time, if you look at the supply side, it's a different story because a lot of the copper that we've mined, all the easy ore has already been taken out of the ground.

These mines have to extend their lifetimes, often digging deeper and moving more material to get the same amount out. It's also a market that's subject to disruptions. On average, about 5% of the copper supply is disrupted each year. Just last year, several of the top-producing mines experienced significant disruptions. All of this, in our view, is shaping up for a longer-term favorable investment backdrop for investors looking for that long-term theme, where where we expect these structural supply deficits to persist.

Kristen Myers: Copper has traditionally been seen as a proxy for the health of the global economy. Is it fair to still look at copper that way?

Steve Schoffstall: Yes and no. It's still an important part of the copper story and copper demand. In 2024, 68% of copper was for its traditional, core uses (e.g., electrification, construction, plumbing, etc.). Looking ahead to 2040, that number drops to about 55%. Then the logical question is: where's that other demand coming from?

In defense, there is a 7% annual increase in copper demand going forward. Artificial intelligence, the energy transition, and other factors are driving a structural shift in copper demand. With that, if you go back about five years, we've really seen a divergence in how copper performs relative to Chinese equities, which over the last 15 or 20 years was the primary driver of copper prices.

Even as the Chinese economy has been struggling with a soft property market, we've seen copper continue to perform quite well because of this structural demand that didn't exist before 2020.

Kristen Myers: Those investors who are thinking about adding exposure to copper miners in their portfolios, what are some of the top things that they should be thinking about and considering?

Steve Schoffstall: One question we get asked a lot is: what do the copper miners look like from a profitability perspective? Given that copper prices have remained high for a considerable period, we're seeing improving financials across many of these copper miners, and 99% of copper mines are now operating profitably. The margins for these copper miners are right around 60%, give or take a few percent.

The next logical question is: how do they look from a valuation perspective? What we see relative to the S&P 500 is they're about 44% cheaper on an enterprise value basis. Those are a couple of things we see as copper prices continue to rise. Not only does it crowd investment in, but the underlying balance sheets for a lot of these copper miners are improving considerably.

Kristen Myers: Sprott has two copper miner ETFs. How are their strategies a little bit different?

Steve Schoffstall: The Sprott Copper Miners ETF, ticker COPP, is the only pure-play copper miner ETF that provides exposure across large-, mid-, and small-cap companies. It also has a 5% allocation of physical copper, which is unique to this fund. We focus on pure-play miners, and this becomes increasingly important in some of these metals, particularly copper. What we mean by pure-play is that they derive at least 50% of their revenue from mining copper or copper assets.

When you look at the copper space, of the 10 largest producers, only three are primarily copper producers and are also publicly traded. Often, with many other strategies that don't have a pure-play tilt, you'll be left with unintended exposure, as some of these companies might generate only 8% or 10% of their revenue from copper. But because they're such a large player, they're including a lot of strategies.

On the other side, we have the Sprott Junior Copper Miners ETF, ticker COPJ, a pure-play strategy. It doesn't have the physical copper component, but it's the only junior copper miner ETF available to investors.

Kristen Myers: Steve Schoffstall, Managing Partner and Head of ETFs for Sprott. Thank you so much for joining us today. Thank you so much for tuning in to Asset TV.