Copper’s less known demand driver: defence

Published date: 9th September 2025 | Author: Tom Bailey

The critical role of copper

Copper is increasingly recognised as one of the most important resources of the 21st century. The U.S. Department of Energy has added it to its critical materials list, while the EU now classifies it as a strategic raw material. Policymakers are even considering building strategic reserves. Under the Trump administration, tariffs have already been applied to U.S. copper imports.

Much of copper’s story is tied to the energy transition. Electric vehicles use around 2.5 times more copper than conventional cars, while the buildout of electricity grids and data centres for AI further add to demand.

A global defence boom

Less well known is copper’s role in defence, an industry undergoing a structural boom in a world of greater geopolitical instability. Global defence spending grew by 9.4% in real terms to $2.7 trillion in 2024, with even more likely in 2025.[1] Europe has announced the €800bn Readiness 2030 plan, Germany has loosened its fiscal rules to allow it to spend more on defence, and NATO recently adopted a new 5% spending target. Arms factories in Europe are already expanding at three times their pre-war rate as the continent shifts from a peacetime “just-in-time” model to a permanent defence-industrial base.[2]

« Copper is essential for this transformation. It is used in everything from ammunition casings and artillery shells to naval systems and advanced electronics. »

Demand to be driven by defence?

As the Modern War Institute notes: “Copper is especially prevalent in munitions. It is often used as a driving band in artillery shells, as a liner in shaped-charge antitank munitions, and jackets for small-arms rounds.”[3]

Analysts estimate that rising military budgets and the global growth in military production could add around 500,000 tonnes of copper demand annually – roughly 1.5% of global consumption.[4] Globally, military demand already accounted for nearly 9% of refined copper output in 2021 and is growing at 14% per year through 2026, according to Simon Hunt Strategic Services.[5]

Taken together, the energy transition and the global rearmament drive suggest copper demand is structural, not cyclical. Both energy security and national security reinforce its role as a critical material.

Supply side struggles to could bring further opportunities

On the supply side, challenges remain. Declining ore grades, frequent disruptions, and the long timelines required to bring new mines online continue to constrain output. As a result, supply deficits are expected to widen through 2025 and beyond.[6]

Against this backdrop, pure-play copper miners are well positioned. With operating leverage to rising copper prices, healthy margins, and robust demand tailwinds, the sector offers direct exposure to one of the most powerful resource themes of the decade.

[1] https://www.sipri.org/sites/default/files/2025-04/2504_fs_milex_2024.pdf

[2] https://www.ft.com/content/ce617187-43ed-4bec-aebf-b1b346c4cfb1

[3] https://mwi.westpoint.edu/as-americas-military-rearms-it-needs-minerals-and-lots-of-them/

[4] https://www.ft.com/content/6a72d0da-ec2e-4235-9adc-1500412614eb

[5] https://mwi.westpoint.edu/as-americas-military-rearms-it-needs-minerals-and-lots-of-them/

[6] https://hanetf.com/news-insights/copper-2025-the-red-metals-next-chapter-after-a-year-in-the-black/