How should we view Goldman Sachs' statement that 'copper is the new oil'?

Due to a sharp surge in copper prices, copper mines in Australia have resumed operations. Australia ranks second globally in copper reserves—after Chile—but its production volume lags far behind South American countries. This is because the mining industry’s focus has long been on coal and iron ore, and also because copper mining was previously unprofitable. Australia also hosts the world’s largest bauxite deposit, yet its extraction intensity remains similarly low, and its output is not the highest globally.

A comprehensive overview of El Niño’s impact on non-ferrous metals

The high-risk window for El Niño impacts spans October 2026 to February 2027—the peak of the South American rainy season. Key risks to monitor in Peru include: (i) heavy rainfall, flooding, and mudslides causing mine shutdowns, disruption to blending of associated ores, and damage to inland roads—leading to situations where ‘mines hold inventory but ports have none’; and (ii) subsequent highland droughts reducing hydropower supply, thereby forcing cuts in electricity allocations for mining and zinc smelting operations, ultimately lowering operating rates at mines and refined zinc smelters. Attention should also be paid to constraints on vessel passage through the Panama Canal due to Central American drought-induced low water levels, which lengthen global zinc concentrate transit times. Domestically, Yunnan Province warrants close monitoring: extreme drought raises power and water costs for smelting, while floods damage mining and smelting infrastructure. In the short term, the El Niño phenomenon has not yet materially disrupted mine production; its current influence is largely confined to market expectations. Over the medium to long term, however, continued attention remains essential regarding the actual impact of natural disasters on major zinc concentrate-producing regions. The tightness in zinc concentrate supply is expected to persist throughout the year, with further reductions anticipated. Rising smelting costs continue to underpin zinc prices, supporting a bullish stance on dips. Lithium 1. Production Distribution by Region According to the U.S. Geological Survey’s (USGS) preliminary 2026 Mineral Commodity Summaries, global lithium mine production in 2025 totaled approximately 290,000 tonnes of lithium metal—a 29.3% year-on-year increase. Production is highly concentrated: Australia accounted for 31.9%, China 21.5%, Chile 19.4%, Zimbabwe 9.7%, and Argentina 8%. Together, these top five producers accounted for roughly 90% of global output. Such geographic concentration means weather-related disruptions are channeled primarily through a few countries and key mining districts. The ‘Lithium Triangle’ of South America—comprising Chile, Argentina, and Bolivia—accounts for nearly 30% of global production and represents the core region for brine-based lithium extraction. Chile’s entire output originates from the northern Atacama Salt Flat, dominated by evaporation pond processes operated by SQM and Albemarle—the world’s single highest-yielding salt flat. Argentina’s elongated geography hosts numerous salt lake projects scattered across the country, currently in the ramp-up phase of new capacity. Australia relies predominantly on hard-rock spodumene mining, centered in Western Australia’s Greenbushes and Pilbara regions; its product is exported as concentrate, heavily dependent on ports such as Port Hedland. China accounts for ~21.5% of global production, drawing mainly from lepidolite deposits in Yichun, Jiangxi, and salt lakes in Qinghai and Tibet. Climatic sensitivities differ across production methods. Brine extraction depends on natural solar evaporation and concentration; precipitation dilutes brine and reduces evaporation efficiency. The Atacama Desert is among the driest places on Earth, receiving minimal rainfall in normal years—making intense rainfall an infrequent but high-impact event. Hard-rock lithium mining, conducted via open-pit excavation and beneficiation, is less sensitive to rain than brine operations; its main weather-related risks stem from heavy rainfall disrupting access roads, triggering temporary mine shutdowns for safety, and delaying shipments. Most mining areas are remote, sharing common vulnerabilities in power supply and logistics infrastructure. 2. Historical Impacts of El Niño Events on Supply 1997–1998 Event: During this episode, severe rainfall and flooding were concentrated along the coasts of Peru and Ecuador and in East Africa; no major flooding occurred in northern Chile, and Atacama Salt Flat operations remained unaffected by weather. At that time, global lithium output was far smaller than today, and Chile was the dominant producer. Chilean lithium carbonate production rose from ~24,000 tonnes in 1997 to ~28,000 tonnes in 1998—growth driven by expanded capacity from Sociedad Química y Minera (SQM)’s salt flat operations.

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