- Ivanhoe Electric is in advanced talks with prospective buyers for copper from its Santa Cruz project in Arizona, chief executive Taylor Melvin said, with interest from traditional traders and from strategic partners seeking supply for US industries. The initial phase is expected to cost $1.4 billion with first output targeted for 2029.
- Buyers may also become lenders. Melvin said offtake deals for the project could include financing, alongside a proposed debt package of up to $1.1 billion from the US Export-Import Bank and discussions with around a dozen commercial banks.
- The pattern is established. Amazon agreed earlier this year to buy copper produced using Rio Tinto’s proprietary leaching technology, which avoids conventional smelting and refining, from a Gunnison Copper mine in Arizona, with the metal destined for Amazon data centres.
- Melvin was blunt about the shortfall, saying the US needs a great deal more than Santa Cruz to fill the gap, with global copper demand growth set to outpace supply and prices near all-time highs.
What Happened?
Ivanhoe Electric was founded by mining billionaire Robert Friedland and holds a portfolio of mineral projects. Santa Cruz will use a process relatively novel in the US to produce copper cathode on site, bringing buyers a step closer to wire, cable and foil, which the company presents as part of a lower-emissions operation. Combined with nearby resources, Melvin said the area could become one of the top US copper-producing regions. The Export-Import Bank package forms part of a government effort to counter China in critical minerals.
Why It Matters?
Hyperscalers signing offtakes for copper that does not yet exist, and potentially financing the mines that will produce it, is the AI buildout integrating backwards into its own inputs. The same behaviour is visible across the supply chain: Nvidia invests in the companies that buy its chips, Meta and Alphabet underwrite nearly three-quarters of US corporate clean power contracts, and now cloud providers are becoming project financiers for mining. The common cause is that the inputs do not exist at the scale required, so the buyers are funding their creation rather than purchasing from a market. That is a different risk profile from procurement, since it means accepting development, permitting and construction risk on assets outside the core business. The timing gap explains the behaviour. Data centres are being built now and Santa Cruz produces first copper in 2029, which is why securing position in future supply matters more than price. It also means current copper demand from this source cannot be met by new US production for years, so the near-term tightness has no domestic remedy. The copper price signal deserves a caution for anyone using it as a macro indicator. Copper has long served as a barometer of global industrial activity, and it fell two days running last week as part of a broad risk-off move that was read as a growth warning. It is simultaneously near record highs on structural AI demand. Both readings are accurate and they describe different horizons, which degrades the metal’s usefulness as a cyclical signal while this demand persists. The government financing is worth noting as industrial policy of the same kind as the Defense Production Act support for a Texas refinery, with roughly four-fifths of the project’s initial phase potentially covered by an export credit agency.
What Next?
Whether an offtake agreement includes financing, and from whom, is the disclosure that would confirm the hyperscaler-as-lender model. Watch the Export-Import Bank package, since $1.1 billion against a $1.4 billion phase determines how much private capital is actually required. First output in 2029 means this is a long-dated position, and construction risk over three years is substantial. For copper markets generally, the question is how many comparable US projects reach construction, because Melvin’s own view is that one mine does not close the gap.
Affected Tickers and Coins: RIO, AMZN, HG
Source: Bloomberg
