25-30% of Global Copper and Iron Supply Faces Election Risks in 2026
AI summary card
25-30% of Global Copper and Iron Supply Faces Election Risks in 2026
J.P. Morgan highlights that elections in key mineral-producing countries like Peru, Zambia, and Brazil in 2026 will profoundly impact global copper and iron ore supply and mining policy environments, with investors urged to focus on permits, taxes, and illegal mining issues.
- Countries holding elections in 2026 account for 25%-30% of global iron ore and copper supply.
- Peru Election: Right-wing candidate Fujimori advocates market-friendly policies, while left-wing Sanchez proposes partial nationalization; Congress seeks to shorten mining concession periods.
- Zambia Election: Incumbent President Hichilema's re-election would maintain policy continuity, supporting the goal of doubling copper production.
- Brazil Election: Intense competition between Lula and Bolsonaro, with focus on critical mineral policies, iron ore royalties, and fiscal pressures.
- U.S. Midterms: Bipartisan consensus on critical mineral supply chain security and steel trade protection, but fiscal policy direction affects gold prices.
- Illegal mining in Peru has become severe, with ~92 tons of illegal gold production in 2024, posing ESG and cost risks to formal miners.
Report interpretation
Overview
This report analyzes the geopolitical impact of 2026 elections in major mineral-producing countries (Peru, Zambia, Sweden, Brazil, U.S.) on metals and mining. These nations collectively represent 25%-30% of global iron ore and copper supply, and their policy directions (including mining permits, taxes, critical mineral strategies, and energy policies) will directly shape investment returns and operational risks for mining firms. Core conclusion: Peru and Brazil's election outcomes are highly binary, potentially causing significant policy volatility, while Zambia and the U.S. reflect more policy continuity and macro-fiscal influences.
Core views
Peru: As the world's third-largest copper producer (~12% of global supply), its June 7 presidential runoff is critical. Right-wing candidate Keiko Fujimori advocates fiscal discipline, deregulation, and private investment—a broadly positive outcome for mining sector investment if elected. Left-wing candidate Roberto Sanchez proposes raising taxes to 25% of GDP, partial nationalization of strategic resources, and a new constitution, which would create near-term uncertainty despite legislative hurdles. Congress also proposes halving mining concession production deadlines from 30 to 15 years, which could deter long-term investment if passed. Illegal mining worsens, with 92 tons of illegal gold output in 2024, causing tax losses and higher security/compliance costs for formal miners. Zambia: August 13 elections see incumbent President Hakainde Hichilema seeking re-election. His first term promoted pro-investment mining policies aiming to triple copper output to 3 million tons by 2031. Re-election would ensure continuity for firms like First Quantum Minerals; opposition victory could bring short-term uncertainty. Power stability and Mineral Royalty Tax predictability are key concerns. Brazil: October elections feature a tight race between President Lula and Senator Flavio Bolsonaro. Brazil supplies ~25% of global seaborne iron ore and 85% of niobium. Lula's government advances critical mineral policies with tax incentives but shows interventionist tendencies (e.g., foreign acquisition reviews); Bolsonaro may favor market-friendly approaches. Fiscal pressures may lead to higher iron ore royalties (CFEM) under either winner, directly impacting Vale and CSN Mineracao. Sweden & U.S.: Sweden's September election—a center-right government continuation would accelerate mining permit reforms, aiding Boliden and SSAB's green transitions; left-wing victory could slow progress. U.S. November midterms have limited impact on non-precious metals mining due to bipartisan consensus on Section 232 tariffs and critical mineral supply chains. Fiscal policy direction (deficit expansion) remains the key variable for gold prices.
Analysis framework
The firm employs a 'Geologic Geopolitics' framework, merging resource distribution with host-country political cycles. It identifies 2026 election countries pivotal to global copper/iron/gold supply chains, dissects candidates' policies (mining concessions, taxes, permits, nationalization risks), and quantifies policy impacts on covered companies' EBITDA exposure to gauge election outcomes' fundamental effects. This elevates political risk as a core mining investment factor beyond traditional supply-demand analysis.
Methodology notes
Geologic Geopolitics Analysis
A method integrating resource geography and host-country political cycles to assess election/policy risks on mining firms' permits, taxes, and asset security premiums.
Policy Binary of Election Outcomes
Analyzing starkly different policy paths (e.g., market-friendly vs. nationalization) under rival candidates, assessing market pricing adequacy and legislative feasibility.
Regional EBITDA Exposure Analysis
Quantifying geopolitical risks' direct financial impact by calculating a country's share of total company EBITDA.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- Southern Copper (SCCO)High exposure to Peruvian copper output, sensitive to Peru's policies
- Weaknesses
- Left-wing win risks nationalization rhetoric and shorter concession periods
- Risks
- Peruvian policy uncertainty, illegal mining disruptions
- First Quantum Minerals (FQM)Zambia operations account for >90% of 2026E EBITDA (assuming ~50% post Cobre Panama restart)
- Strengths
- Incumbent re-election ensures pro-investment continuity
- Weaknesses
- Opposition win may bring policy uncertainty
- Risks
- Zambia election outcome, power supply stability
- Vale (VALE)Brazil iron ore giant, impacted by fiscal/tax policies
- Weaknesses
- Exposed to potential CFEM rate hikes
- Risks
- Brazil fiscal policy shifts, critical mineral export restrictions
- Hochschild Mining (HOC)Peruvian gold producer, >50% EBITDA from Peru
- Strengths
- Fujimori win could crack down on illegal mining, benefiting formal operators
- Weaknesses
- Sanchez win may prolong illegal mining legalization
- Risks
- Peru illegal mining competition, regulatory changes
- AngloGold Ashanti (AU)U.S. Nevada projects coming online, affected by U.S. fiscal policies
- Strengths
- Bipartisan U.S. support for critical minerals
- Risks
- U.S. fiscal deficit path impacting gold prices
Key data
- Affected Supply Proportion25%-30%Share of global iron ore and copper supply from 2026 election countries
- Peru Illegal Gold Output~92 tons2024 estimate, ~44% of Peru's total gold export value
- Zambia Copper Target3 million tonsGovernment's 2031 goal, up sharply from ~890k tons in 2025
- Brazil Iron Ore Royalties3.5%Current CFEM rate, at risk of increase
- 2026 Year-End Gold Price Forecast$6,300/ozJ.P. Morgan Commodities Research team projection
- Peru Mining Concession Deadline Proposal15 yearsCongress proposes halving production deadline from 30 years, potentially deterring long-term investment
Impact & implications
For Peru-exposed firms (e.g., Southern Copper, Anglo American, Hochschild), Fujimori's win would improve investment climates, while Sanchez's victory could amplify policy noise and valuation discounts. In Zambia, Hichilema's re-election would lower operational risk premiums for First Quantum Minerals. Brazil's outcome affects Vale and CSN Mineracao's tax burdens and critical mineral project approvals. Geopolitical risk is now a non-negligible valuation component for mining stocks, requiring investors to adjust positions based on election odds to hedge abrupt policy shifts.
Risks
- Surprise election outcomes leading to radical policies (e.g., nationalization, steep tax hikes)
- Escalating illegal mining, causing social conflicts and operational disruptions
- Global recession sharply reducing metal demand
- Energy price volatility raising mining costs
- Host-country currency devaluations affecting local earnings
What to watch
- Peru's June 7 presidential runoff and congressional progress on mining concession deadlines
- Zambia's August 13 election outcome and new government's stance on power infrastructure/taxes
- Brazil's October election runoff and policies on critical mineral exports/iron ore royalties
- U.S. November midterm results and impact on fiscal deficits/critical mineral bills
- Sweden's September election coalition and mining permit reform attitudes