Giustra: Copper market needs six new mines a year to 2050

Only four undeveloped, world-class copper deposits remain outside the hands of major miners, leaving the industry facing a supply crunch that could require six new mines of that scale every year until 2050, mining financier Frank Giustra says.

Giustra, who has spent 45 years financing mining companies, told MINING.COM’s Top of Mine that JPMorgan forecasts a copper deficit of 2 million tonnes by 2030, widening to 8 million tonnes by 2035. He said data centres alone are expected to consume about 500,000 tonnes of copper by the end of the decade.

Large copper discoveries typically take 10 to 15 years, and sometimes 20, to move from discovery into production, with junior miners making most discoveries before majors acquire the projects.

“Copper is the backbone to almost every electrification industry in the world,” Giustra said.

Meeting future demand will depend on discoveries that cannot be developed quickly enough, underscoring why higher prices may be the only mechanism left to balance the market.

Four deposits left

Giustra said only four undeveloped copper deposits meet the scale, grade and near-surface characteristics major miners typically seek: Copper Giant Resources (CVE: CGNT) in Colombia, Solaris Resources (TSX: SLS) in Ecuador, and Aldebaran Resources (TSXV: ALDE) and McEwen Copper, the copper subsidiary of McEwen Mining (TSX: MUX; NYSE: MUX), both in Argentina. 

Giustra is an investor in Copper Giant. While deeper deposits remain, he said they would take longer and cost more to develop.

He argued the competition for strategic minerals has evolved beyond commodity markets into geopolitical rivalry.

“The world order as we knew it is dead as the dodo,” Giustra said.

Giustra said China began securing overseas mineral deposits roughly 25 years ago by financing infrastructure across Africa and South America in exchange for mining rights, while the US and Europe recognized the strategic importance of critical minerals only in recent years. He said producing countries are also tightening export controls, imposing domestic processing requirements and making permitting more restrictive.

Buy later, pay more

Despite the looming shortage, Giustra does not believe the next wave of mining acquisitions has begun because major producers remain wary after overpaying for assets during the last commodity supercycle.

He said mining companies would rather allow juniors to absorb exploration, permitting and feasibility risks before acquiring projects at significantly higher valuations than risk repeating the mistakes that damaged balance sheets after the boom that ended around 2012.

“That craziness has not come back, but it will,” Giustra said.

He expects consolidation across the sector, including mergers between major producers, acquisitions of junior developers and combinations among juniors seeking greater scale.

‘A liquidity event’

Giustra said recent weakness in gold prices does not reflect deteriorating fundamentals but rather a temporary scramble for liquidity.

He said sovereign investors needing US dollars have been selling highly liquid assets, including US Treasuries, while central banks continue reducing their reliance on the dollar in favour of gold. According to Giustra, the Bank for International Settlements classifies gold as a tier one reserve asset equivalent to Treasuries, while the share of US dollars in central bank reserves has fallen from about 70% to 56% over recent years. He added that 68% of central banks surveyed this year expect to continue buying gold through 2026 and beyond.

He described the recent pullback as “a liquidity event” rather than a change in the long-term outlook for bullion.

The silent tax

Giustra said mounting global debt ultimately leaves governments with few policy options beyond lower interest rates and renewed quantitative easing during the next recession.

“It’s the silent tax,” he said. “They’re going to rob you through inflation.”

He estimated global debt at roughly $350 trillion and said governments are unlikely to reduce deficits through higher taxes or spending cuts. Instead, he expects monetary expansion to continue, eventually fuelling inflation while supporting higher gold prices.

Giustra said he has warned for years that the global monetary system faces structural change but does not attempt to predict when broader financial markets will turn. While he believes equities are in the largest bubble in history, he said timing a correction is impossible.

“I started buying gold in 2001 when it was $250 an ounce. I’ve never sold my gold,” Giustra said. “I bought more in 2018. I bought more last year.”

“It’s going higher. How high and what period of time? No clue. But I think it’s going a lot higher.”