Truth Below Ground, the independent mining research platform, updates its view on the copper market and notes that recent developments do not alter the structural deficit thesis — if anything, they may be reinforcing it.
The note also covers the impact of the energy shock on mining companies’ costs, the recent dynamics in gold and critical minerals, and the recent performance of Rio2 and Sigma Lithium, two of the companies under coverage.
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June 2026. Truth Below Ground, the independent mining research platform, warns that copper is facing an increasingly tight environment, marked by significant supply disruptions, rising prices of critical inputs, energy pressures and a demand outlook that continues to gain traction from electrification, artificial intelligence and battery energy storage systems. Against this backdrop, higher prices remain the key mechanism for structural adjustment.
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The firm recalls that, in its report published in the second half of 2025, it had already laid out a scenario of a structural copper deficit gradually consolidating through to 2030. However, the events of recent months suggest that several of the risks identified at the time are materialising with greater intensity than anticipated.
Copper at the heart of supply and demand tensions
One of the main areas of concern is the evolution of some of the world’s largest copper assets. Truth Below Ground highlights the impact of Grasberg, the world’s second-largest copper producer, where full recovery is not expected until early 2028. To this must be added the downward revisions at Kamoa-Kakula in the Democratic Republic of the Congo and weak production in Chile.
The update places particular emphasis on sulphuric acid, a fundamental input in copper production via leaching. The combination of the effective closure of the Strait of Hormuz since March and the halt to Chinese sulphuric acid exports from May 2026 could affect between 15% and 20% of global copper production. What could initially be interpreted as a very short-term disruption (a matter of months) has, according to Truth Below Ground, become a more structural risk. That said, the firm warns against the mistake of extrapolating an extraordinary situation into the long term and assuming that current sulphur or sulphuric acid prices must necessarily become long-term prices. In cyclical industries, elevated prices act as an adjustment mechanism: they incentivise new supply, substitution, the mobilisation of inventories and alternative processing routes.
Market tightness is also reflected in the concentrates market, where TC/RCs have moved into negative territory — a clear signal of supply rigidity. For Truth Below Ground, this development confirms that the current problems go beyond a simple logistical disruption and reinforce pressure on the marginal cost of production.
Added to this is the impact of the energy shock. Higher diesel prices, in particular, will affect mining companies unevenly, depending on their cost structure, supply and hedging policies, and the stage of the capex cycle. If this pressure consolidates, the incentive price required to develop new supply should also shift upwards.
On the demand side, the firm points to two additional vectors: artificial intelligence and grid-scale battery energy storage systems (BESS). The large technology companies are accelerating their data centre infrastructure investment plans, with direct implications for copper demand in wiring, cooling, electrical supply and connection networks. At the same time, BESS are consolidating as a new structural driver that is not yet fully captured in previous models.
Although inventories accumulated on exchanges such as the LME, SHFE and COMEX can act as a short-term buffer, Truth Below Ground considers that they do not invalidate the structural thesis. Historically, when supply deteriorates simultaneously on several fronts, inventories tend to drain faster than consensus anticipates.
An increasingly complex picture for mining investors
For the analyst team, the current environment demands a deeper analysis than simply reading the prices of different commodities and metals. The mining sector sits at the crossroads of multiple forces: logistical disruptions, energy, input availability, geopolitics, investment in artificial intelligence, electrification and capital cycles.
Gold and critical minerals, for example, appear increasingly conditioned by geopolitical factors and liquidity dynamics. In gold’s case, the firm notes that its recent behaviour cannot be explained by its safe-haven status, having been negatively correlated with oil and positively correlated with risk assets. Rather, the dynamics at play seem to be tied to the pressure that high oil prices are exerting on emerging economies — which have been the main source of gold demand in recent years — as well as to expectations around central banks and gold’s relationship with interest rates. In critical minerals, tungsten, yttrium and rare earths show an increasingly fragmented market, where trade restrictions, dependence on China and the divergence between domestic and ex-China prices have become relevant signals.
According to the firm, the most relevant feature of current shocks is not only the initial fall in supply, but the asymmetry of the recovery. Halting production or interrupting supply chains can be quick; restarting them tends to be much slower. The longer disruptions last, the greater the risk that initially cyclical problems become persistent factors. Today, this dynamic is particularly relevant because the epicentre of the disruptions lies in the oil and gas sector, whose implications for mining — through energy and key inputs such as sulphuric acid — and for the wider economy are broad and deep.
In this context, Truth Below Ground also warns of a growing headwind: cost inflation. The energy shock is already beginning to feed through to mining companies’ accounts, especially via diesel, freight and other inputs. Large producers such as Barrick Mining and Newmont have already quantified meaningful sensitivities to oil price movements, which could lead to upward revisions of AISC guidance and some margin compression in upcoming quarters, particularly at companies with less energy hedging, more fuel-intensive assets or greater logistical issues. Over the medium term, if the marginal cost of producing gold or copper shifts structurally higher, the economic floor for the metals could also rise.
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Company coverage: Rio2 and Sigma Lithium
The firm has also updated its coverage of some of the companies recently analysed. In the case of Rio2 Limited, Truth Below Ground notes that Q1 2026 results broadly confirm the trajectory anticipated in its initiation of coverage. The company now operates two cash-generating assets simultaneously: Fenix Gold, in Chile, and Condestable, in Peru.
Condestable was the positive surprise of the quarter, with strong copper production, costs below plan and a meaningful contribution to group revenues. Fenix Gold, by contrast, has started more slowly than expected, although the factors behind the delay appear transitory in nature. For Truth Below Ground, the coming quarters will be key to verifying whether Fenix can reach stacking rates close to 20,000 tonnes per day and whether Condestable maintains its strong initial operating performance.
The firm also highlights the financial discipline demonstrated by Rio2 after voluntarily repaying part of the debt associated with the Condestable acquisition, which reinforces the positive view on the management team.
In the case of Sigma Lithium, Truth Below Ground takes a more cautious stance. Although recent results show an apparent improvement in sales, gross margin and net profit, the firm considers that a significant part of this improvement stems from non-recurring factors, particularly the monetisation of low-grade material and lithium fines previously stockpiled.
According to Truth Below Ground, Sigma is not yet in a clear growth phase, but rather in a process of financial and operational stabilisation. Liquidity remains tight, the conversion of earnings into cash needs to improve, and the company continues to depend on outstanding receivables, refinancing, offtake agreements and verifiable progress at its Phase II.
Additional coverage: Savannah Resources and NGEx Minerals
Beyond Rio2 and Sigma Lithium, Truth Below Ground’s coverage includes two further companies: Savannah Resources, one of the most relevant and singular lithium stories in Europe, focused entirely on the Barroso Project in Portugal — one of the key assets for reducing European dependence on the Asian supply chain. And NGEx Minerals, one of the most promising explorers of copper and other metals, located within the Vicuña District, whose profile takes on particular relevance in a structural deficit scenario such as the one described.
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