Copper, a critical metal essential to electrification thanks to its malleability, durability and conductivity, sits at the heart of global industry, from legacy electrical grids to the burgeoning AI data center, EV and broader renewable energy industries, making it a foundational component of any diversified portfolio.
This article is a journalistic opinion piece which has been written based on independent research. It is intended to inform investors and should not be taken as a recommendation or financial advice.
According to the International Energy Agency, copper could fall into a 30 per cent deficit by 2035, representing more than 5 million tons, with the shortage already beginning to show itself in the data, driven by:
- Average global copper grades falling by 40 per cent since 1991, as per a report from BHP.
- Higher capital costs given inflation’s relentless rise, with BHP finding that average capital requirements for brownfield projects have increased by 65 per cent since 2020.
- The declining rate of discoveries, with only 5 per cent of new deposits over the past 35 years coming to light within the past decade, coupled with the fact that it can take 15 years or more to usher a project from discovery to production.
These market realities have been pushing the copper price higher as of late, including by more than 50 per cent year-over-year (YoY), last trading at about US$6.60 per pound, and are expected to continue doing so, supposing the metal’s deficit worsens in conjunction with incremental strain on the grid due to AI and renewable energy adoption.
Copper’s potential for long-term price momentum, in turn, opens the door for investors to build exposure to the space through mining stocks, whose underlying companies, residing in mining-friendly jurisdictions, are generating cash flow and delivering on data-driven growth plans, sidestepping the volatility associated with owning physical commodities through cost management and operational efficiency.
Introducing Capstone Copper
A global producer deserving of your due diligence is Vancouver-based Capstone Copper (TSX:CS), market cap C$10.17 billion, whose profitable portfolio spanning the mining lifecycle, including four producing mines across the Americas primed for long-term growth, is under the care of a leadership team with more than 150 years of operational and mine build experience.
A long-life project portfolio
While geopolitical and regulatory risks are ever-present in any jurisdiction – including in Capstone’s chosen markets of Chile, Mexico and the United States – the company has managed to assemble an enviable set of high-quality projects, collectively growing production from 164,000 tons in 2023 to up to 230,000 tons guided for in 2026, all while boasting mine lives estimated between 2038 and 2049, positioning the company to leverage the copper price with increasing efficiency for decades to come. Here’s a brief breakdown:
- Pinto Valley is an open-pit copper and molybdenum mine in Arizona’s Globe-Miami district, one of the oldest and most prolific mining districts in the United States. The mine’s land package offers numerous expansion opportunities to foster economies of scale beyond the current mine life of 2039, with year-to-date (YTD) production of 20,758 tons already surpassing all of 2025.
- Cozamin is an underground copper, silver, zinc and lead mine in Mexico that has generated positive free cash flow since going live in 2007. Production of 11,675 tons YTD makes the surpassing of 2025’s total of 13,033 tons a foregone conclusion. An exploration program is ongoing to substantiate mine life extension.
- Mantos Blancos, mine life 2038, is an open-pit, high-grade copper and silver mine in Chile with significant near-term expansion potential through its sulphide concentrator plant (from 20,000 to 27,000 tons per day (tpd)), through drilling below and adjacent to the open pit, as well as through the exploration of mineralized outcrops at the Rosario prospect 15 km to the south. Q2 2026 production reached 9,600 tons, more than doubling to 20,101 tons YTD, putting 2025’s total of 26,217 tons well within the company’s sights.
- Mantoverde, 30-per-cent-owned by Mitsubishi Materials, is an open-pit, oxide heap leach mine in Chile with a 2049 mine life and a 32,000 tpd sulphide processing plant – currently undergoing expansion to 45,000 tpd – in conjunction with near-mine exploration and district consolidation opportunities under active pursuit. Q2 2026 production of 18,190 tons, increasing to 31,923 tons YTD, sits just short of the 32,775 tons yielded in all of 2025.
- Finally, Santo Domingo is a fully permitted copper, iron, cobalt and gold project near Mantoverde expected to produce 106,000 tons of copper annually for the first seven years of its mine plan. Detailed engineering and financing work is ongoing.
Although China still represents about half of global copper demand, making its policy decisions, including a focus on recycling, key factors in market dynamics, Capstone’s portfolio is strategically located to both supply the communist nation, as well as tap into the rest of the market’s needs, granting investors global exposure across the ideological divide.
Proven capital allocation skills
Capstone Copper leadership has been successful at aligning production growth with the cost optimizations and increasing profitability the market demands before rewarding investors with shareholder value.
Getting down to brass tacks, this looks like consolidated Q2 2026 production of 51,759 tons at C1 cash costs of only US$2.82 per pound, entailing a hefty 42 per cent margin to the current spot price, resulting in:
- Record adjusted EBITDA for the seventh consecutive quarter, coming in at US$354 million, up by 8 per cent quarter-over-quarter and 64 per cent YoY. On a trailing twelve month basis, the figure rises to US$1.24 billion, up from US$953 million in 2025, US$496 million in 2024 and US$260 million in 2023.
- Operating cash flow of US$259.7 million, up by 22 per cent YoY, driven by higher realized copper prices.
- Net debt of US$675 million, representing a net-debt-to-EBITDA ratio of 0.5x, down from US$738 million or 0.7x in Q1 2026.
This income statement momentum, propelled by cash costs expected to fall below the US$2 per pound mark over the coming years, in tandem with a ~70 per cent rise in production to 375,000 tons per year – according to Capstone’s Q2 2026 investor deck – is supported by about US$1 billion in liquidity registered at quarter end, comfortably ahead of the US$790 million in capital expenditures the company has planned for 2026, positioning it to advance growth initiatives without touching any internally generated cash flow well into 2027.
Looking ahead
Despite posting a more than 1,100 per cent return since 2020, making Capstone Copper a more than 10-bagger over the period, the company benefits from the assets and leadership team required to translate exploration and production upside into shareholder value through the middle of the century, and perhaps beyond, should copper’s deficit materialize as expected.
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