Mercuria’s $1.2B Kazakhstan Copper Investment: What it Means for the Market

By Abdul Ahad NazakatReviewed by Laura ThomsonJan 15 2026

Mercuria, the Swiss commodity trading house, has finalized a $1.2 billion prepayment facility with Kazakhmys, the largest copper producer in Kazakhstan. This deal is one of the largest metals prepayment agreements recorded in recent years, signaling a profound shift in how commodity trading firms manage capital to secure physical supply. In a copper market defined by tightening availability and surging demand, the move highlights the transition of trading houses into strategic financiers.¹

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A total of 200,000 tons of copper cathodes is provided to Mercuria each year as part of the eight-year agreement, followed by a production-sharing arrangement for the remainder of the term. This volume is significant, representing approximately 40 % of the current refined copper output in Kazakhstan. Through this facility, Mercuria has rapidly expanded its presence in the metals sector, establishing a formidable position alongside established giants such as Trafigura and Glencore.²

Evolving Models in Commodity Financing

The structure of this agreement represents a departure from standard industry practices. Historically, prepayment facilities in the metals sector have been relatively modest, ranging from $100 million to $500 million, with repayment terms typically lasting two to three years.¹ Such short durations allowed trading firms to maintain high liquidity and limit long-term exposure to specific geographic regions or individual producers.

Read More: Working Towards a Sustainable Copper Mining Industry

At $1.2 billion over eight years, the Mercuria facility increases the scale and duration of metals financing significantly, moving closer to the massive capital structures common in the oil and gas sectors.¹ This deployment is part of a broader strategy; since 2024, Mercuria has arranged approximately $3.5 billion in metals financing across Chile, Bulgaria, the Democratic Republic of Congo (DRC), and Zambia.² This trend indicates that trading houses are increasingly filling the void left by traditional commercial banks, which have become more hesitant to offer long-term capital in certain jurisdictions due to shifting risk appetites and stringent regulatory requirements.

Analysis of the Copper Supply-Demand Gap

The timing of this investment is inextricably linked to projections of a looming copper supply deficit. Institutional analyses suggest the global market will enter a sustained deficit starting in 2026. J.P. Morgan research forecasts a refined copper shortfall of approximately 330,000 metric tons by 2026, while other analysts suggest a long-term supply gap could reach 10 million tons by 2040 if production levels do not increase substantially.³

Demand for copper is being influenced by several concurrent industrial shifts. The expansion of data centers for artificial intelligence (AI) is an increasing source of consumption; AI infrastructure requirements are projected to add 110,000 metric tons of annual demand by 2026.³ The global transition to electric vehicles (EVs) and renewable energy infrastructure is also fundamentally altering the market.

According to the International Energy Agency (IEA), an average electric vehicle requires approximately 53 kilograms of copper - more than double the amount used in a standard internal combustion engine vehicle.⁴ When combined with necessary upgrades to aging electrical grids, the baseline for global copper demand has adjusted permanently upward.

On the supply side, the industry faces severe physical constraints. Global ore grades have decreased from approximately 1.5 % to below 0.7 % over the last 20 years, which means miners must process significantly larger volumes of material to maintain the same output. Furthermore, the capital required to develop new mines has skyrocketed, with costs now estimated at $15,000 to $20,000 per ton of production capacity.⁵ These factors, alongside lengthy permitting processes and environmental hurdles for new "greenfield" projects, limit the ability of supply to respond to price changes in the short term.

Political and Economic Context in Kazakhstan

Mercuria’s investment aligns with a crucial period of political and economic transition in Kazakhstan. The country is moving from the long-standing administration of Nursultan Nazarbayev to that of President Kassym-Jomart Tokayev. This shift has altered existing relationships between the state and international commodity traders, creating fresh opportunities for new participants like Mercuria to enter the fray.¹

While firms like Glencore and Vitol have historically held prominent positions in Kazakhstan’s resource sectors, the current administration has facilitated new ownership structures intended to modernize the economy.

The transition of Kazakhmys to private control under Eduard Ogay via Qazaq Acquisition Corp is a primary example of this shift.¹ Mercuria provided the necessary capital for this transition in exchange for long-term supply rights, effectively anchoring itself to the country's most vital mining asset.

Kazakhstan plans to increase its copper ore production to 300 million tons annually by developing major deposits, including Aidarly and Koksay. The government’s industrial strategy involves $26.7 billion in investments intended to move raw materials toward domestic processing and manufacturing.⁶ By securing an eight-year agreement, Mercuria has established a secure position within Kazakhstan's planned production increase, ensuring it has physical material to trade regardless of global spot-market volatility.

Implications for the Mining and Trading Industry

The scale and duration of this deal suggest several permanent changes for the broader market:

1. Competitive Pressure: Established trading houses now face a competitor willing to deploy billion-dollar facilities over much longer terms. This competition for offtake agreements provides mining companies with more options for financing and may force other trading firms to extend their own financing horizons to secure deals.¹
2. Diversification of Supply Chains: Trading houses are using their financing capacity to influence global trade flows and bypass traditional bottlenecks. For example, Mercuria has recently supported ventures to transport copper from the DRC to the United States, providing an alternative to traditional routes that often lead into China.⁷ The Kazakhstan agreement allows Mercuria to secure inventory across different regions, significantly reducing geographical and geopolitical risk.
3. The Role of Private Capital: As commercial banks reduce their lending to mining projects due to risk management or environmental policies, trading houses are filling the role of strategic financiers.⁸ This provides producers with stable capital for long-term operations. While this ensures production continues, it typically requires producers to commit a large portion of their output to the financier at set terms, potentially limiting their ability to benefit from future price spikes.

Conclusion

Mercuria’s $1.2 billion investment in Kazakhstan reflects a strategic move to secure supply in a market with significant structural constraints. By committing capital over an eight-year period, the firm is positioning itself for a market where physical control over the commodity is the primary competitive advantage.

For the mining industry, this deal demonstrates that long-term capital is available for high-quality assets if producers are willing to enter deep partnerships with traders. For the market as a whole, it indicates that the strategy of commodity trading is moving toward long-term offtake and supply security, as participants prepare for the immense industrial requirements of the energy transition and digital infrastructure expansion.

References and Further Reading

1. Discovery Alert. (2026, January). Strategic Capital Allocation: Central Asian Mining 2026. https://discoveryalert.com.au/strategic-capital-allocation-central-asian-mining-2026/
2. MINING.COM. (2026, January 8). Mercuria redoubles metals push with $1.2 billion Kazakh deal. https://www.mining.com/web/mercuria-redoubles-metals-push-with-1-2-billion-kazakh-deal/
3. J.P. Morgan Global Research. (2025). Copper Market Outlook: Tightening Market and Price Forecasts. https://www.jpmorgan.com/insights/global-research/commodities/copper-outlook
4. International Energy Agency (IEA). (2024). The Role of Critical Minerals in Clean Energy Transitions. https://www.iea.org/reports/the-role-of-critical-minerals-in-clean-energy-transitions
5. S&P Global Commodity Insights. (2024). The Future of Copper: Will the Looming Supply Gap Short-circuit the Energy Transition? https://www.spglobal.com/marketintelligence/en/news-insights/research/the-future-of-copper-will-the-looming-supply-gap-short-circuit-the-energy-transition
6. The Astana Times. (2025, July). Kazakhstan Accelerates Industrialization With $26.7 Billion Investment. https://astanatimes.com/2025/07/kazakhstan-accelerates-industrialization-with-26-7-billion-investment/
7. Financial Post / Bloomberg. (2026, January 12). Congo Sending First Copper to US Under Mercuria-Backed Venture. https://financialpost.com/pmn/business-pmn/congo-sending-first-copper-to-us-under-mercuria-backed-venture
8. The World Bank. (2024). Commodity Markets Outlook: Copper Trends and Industrial Demand. https://www.worldbank.org/en/research/commodity-markets

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