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The Glencore (LSE: GLEN) share price has surged in recent months, making it one of the top performers in the FTSE 100. With copper prices up 20% over the past year, can strong metals demand outweigh ongoing weakness in coal?
Australian coal
While many rivals are exiting coal, the miner has doubled down, even acquiring Teck Resources’ steelmaking coal business last year.
Yet the strategy is under serious pressure. Benchmark Newcastle coal prices are down 20%, and hard coking coal has fallen by a third. Australia, where it has major operations, has felt the impact the most.
Operational costs are climbing as mines go deeper and labour remains tight. On top of this, the Australian government recently announced a A$600m rescue package to keep Glencore’s loss-making copper smelter afloat.
Critical minerals on the rise
The Australian government’s intervention highlights a bigger trend: securing critical minerals supply is becoming a national priority.
Just as the space race of the 1950s defined a generation, the global race for AI dominance is set to reshape industries – and geopolitics.
It isn’t just about China’s generative AI model, DeepSeek. Governments are positioning themselves to control metals essential not only for AI but also for renewable energy, creating a strategic bottleneck that could have long-term implications for miners like Glencore.
Capital spending crunch
Even as demand for critical minerals surges, industry capital spending barely budged – rising just 5% in 2024, down from 14% the year before. That’s a warning sign for anyone betting on the energy transition.
Copper, in particular, is under the microscope. The International Energy Agency predicts a 30% supply deficit by 2035. And with good reason: the easy-to-mine deposits are long gone.
Chile is often likened to the second-largest oil-producing country by being called the ‘Saudi Arabia of copper’. But it has seen flat output and new discoveries are increasingly rare. Mining companies are having to dig deeper, literally, to find profitable ore.
Then there’s the permitting headache. On average, it takes 15 years to turn a copper discovery into a working mine. That’s a long wait in a world chasing AI, renewables, and data centres hungry for electricity.
All of this means supply could remain tight for years to come. For miners this presents both a challenge and an opportunity: those who can navigate the complexity may be well positioned to benefit from a market that’s suddenly in short supply.
Bottom line
The miner is targeting 850,000 tonnes of copper production in 2025, rising to around 1 million tonnes by the end of the decade.
Even beyond that, there’s optionality for another 1 million tonnes. The company is under no pressure to bring it online immediately – expansion will be carefully timed when prices reflect a real supply shortage.
That matters because copper is central to electrification, AI infrastructure, and the energy transition. Supply constraints are likely to persist, making timing crucial.
Glencore’s approach gives it flexibility to maximise returns without flooding the market. While share price swings are inevitable, this combination of near-term growth and long-term optionality keeps me confident.
It’s why, despite ongoing share price volatility, I continue to add to my position when finances allow.
