Surging demand and insufficient supply of new copper projects could result in copper prices jumping to $20,000 per metric ton in a few years, double the current price of around $10,000 per ton which is the highest in a decade, analysts say.

Soaring demand for critical minerals to support the energy transition, including copper, has already made copper one of the hottest metals this year, with prices jumping to $10,000 per ton, double from the pre-pandemic levels due to the global push toward decarbonization and government support for electric vehicles (EVs) and renewable electricity generation.

The copper projects are seeing a decline in resource quality over time. For example, the IEA says, the average copper ore grade in Chile declined by 30 percent over the past 15 years. Investments in copper projects are also lagging behind the expected surge in demand.

That’s why it’s no surprise that David Neuhauser, founder and managing director of U.S. hedge fund Livermore Partners, told CNBC this week - “I think copper is the new oil and I think copper, for the next five to 10 years, is going to look tremendous with the potential for $20,000 per metric ton”

This is dangerous.