Author: Paul Harris.
Copper’s challenge is not a lack of resources in the ground. What it has lacked, cycle after cycle, is supply that shows up on time. That gap — between when the world needs copper and when new mines can actually deliver it — is now the central fact of the market, and it’s what makes a mid-sized project under-construction in central Ecuador worth watching closely.
Demand is broadening
Copper demand is being pulled by multiple investment cycles at once: electrification across developing economies, the expansion and modernization of power grids, the move towards renewable energy generation, such as wind and solar, and the revival of interest in nuclear power generation. This alone would be enough to increase the world’s thirst for copper, but added to this is new demand from the development of data centres, and defense restocking as a result of conflicts in Ukraine and the Persian Gulf.
The IEA projects world electricity demand will climb 169 per cent by 2050, driven by the simple fact that as countries get richer, they use more power: there is no such thing, historically, as a low-energy, rich country. Layer on data centres, grid buildout, EVs, and rising defence spending, and the demand side of the copper ledger looks unusually crowded for a single decade.
This article is being disseminated on behalf of Silvercorp Metals Inc. a third-party issuer and is intended for informational purposes only.
The challenge is that supply isn’t keeping pace, which is reflected by the fact that Dr Copper, long considered an economic bellweather, has held pricing about US$6/lb throughout 2026, and is currently at all-time highs of around $6.70/lb at a time when the Persian Gulf conflict threatens to put the world economy into a slowdown or even a recession. Copper has also held the line as pricing for precious metals gold and silver have fallen 30 per cent and 50 per cent since early in the year.
This may be bad news for humanity in general but it is good news for copper producers and copper developers. Producers are experiencing fat margins and improving balance sheet strength, while developers see higher for longer metal pricing to underpin their project economics and potentially make raising development finance easier, although it is never easy.
Wood Mackenzie sees demand surging 24 per cent by 2035. S&P Global has been blunter still, warning in its January 2026 report that the race for AI and growing defence budgets are compounding an already-widening copper gap. BloombergNEF frames the risk in absolute terms: a possible 19-million-tonne shortfall by 2050 if new mines and recycling capacity don’t materialize. The International Copper Study Group expects the refined market to run a roughly 150,000t deficit in 2026 alone. There are not enough development projects in the pipeline to fill a growing supply deficit, however. The IEA’s 2026 Global Critical Minerals Outlook puts announced projects roughly 25 per cent short of what 2035 will require.
None of this is news to the industry, which has been forecasting a supply crunch for the past five years. What has been lacking is an incentive price for projects in the development pipeline to advance. Even with copper comfortably at $6/lb, few project owners have given the green light to construction, suggesting that a higher copper price may be necessary. This is why the investors talk of the industry having a coiled spring aspect to it. Knowing a shortage is coming and being able to build your way out of it are two different things.
Supply pipeline
A new copper mine takes about 17 years, on average, to go from discovery to first production, according to the IEA. The world isn’t short of copper in the ground, but it is short of copper that can be permitted, financed, engineered and built inside a decade. More than half of today’s global production comes from mines over 20 years old, and average ore grades have fallen roughly 40 per cent since 1991. This means that existing operations are working harder for less. Development costs are also increasing. The capital intensity for new projects, the amount a developer needs to spend to install 1 tonne of annual production capacity, is now at least $20,000/t for most projects, increasing the financial risk for developers. The developers, remember, are just getting used to having more robust balance sheets and do not want to quickly return to having more precarious and leveraged ones. That combination is exactly why so many technically attractive deposits across Latin America and elsewhere remain years, not months, from a construction decision.
El Domo clears that readiness filter
Projects that can proceed in this environment are set to enjoy an opportunity that has rarely been seen in the notoriously volatile, copper sector. The cyclicality of the copper sector often means that during a downturn many mines go out of business, with only those in the bottom half of the cost curve surviving or even prospering. An adage in the base metals sector is that two years of super profits at the top of the cycle has to carry an operation through eight-to-ten years of poor pricing. The timing of those two years is critical. A mine that can come into production during the top of the cycle experiences rapid capital payback, and is therefore better able to withstand the inevitable downturn years.
Silvercorp Metals’ (TSX/NYSE American: SVM) El Domo project, in Ecuador’s Bolívar Province looks set to do just that. The project has advanced beyond permitting and has been under active construction since 2025, with commissioning and first production targeted for July 2027. It holds its key environmental and construction permits, which were upheld on appeal by Ecuador’s Provincial Court of Bolívar in November 2024. Once in production, El Domo is expected to produce 24Mlb of copper, 27,000oz of gold, 26Mlb of zinc, 529,000oz of silver and 700,000 lb of lead annually from July 2027. A February 2026 budget update revised the construction budget from $240.5 million to $284 million, mainly due to higher Ecuadorian VAT rate rather than a cost blowout. As this article is written (August 2026), open-pit pre-stripping has begun, and major processing-plant equipment had been procured.
Silvercorp is funding the development from cash flow from its silver-zinc-lead mines in China and a $175.5 million precious-metals stream financing from Wheaton Precious Metals (TSX:WPM). As at June 30. 2026, the company finished the quarter with $387 million in cash, which means it can absorb any cost overruns.
The El Domo development represents a geographical diversification for Silvercorp away from its production base in China, and increases the suite of metals it produces, to include copper. Establishing a production base in Ecuador will also be beneficial when the company seeks to develop its nearby Condor gold-copper project. El Domo won’t close the global copper deficit on its own, but it is one of the few projects that is permitted, funded and physically under construction and that will benefit from converging positive market factors.
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