El Niño Can Become a Copper Supply Problem

20 August 2026

Executive Summary

A strengthening El Niño is normally viewed as a weather or agricultural issue.

For businesses dependent upon metals, El Niño also deserves attention as an upstream energy risk. Zambia provides a striking example of why: previous drought sharply reduced hydropower generation and contributed to electricity shortages affecting copper production. Investors are therefore watching the strengthening 2026 El Niño closely, although current seasonal forecasts do not establish that Zambia itself will experience a repeat of those drought conditions.

The World Meteorological Organization says a strong El Niño is developing and is expected to intensify during August–October 2026, producing significant shifts in rainfall patterns around the world.

One particularly interesting vulnerability is Zambia.

Zambia is Africa’s second-largest copper producer and is aiming to increase annual copper output to around 3 million tonnes. But investors are warning that El Niño could threaten that ambition because the country’s electricity system remains heavily dependent upon hydropower.

That relationship has already caused problems.

Previous drought reduced hydropower generation sufficiently to trigger severe electricity shortages and load-shedding, affecting industrial activity. The World Bank describes Zambia’s reliance on hydropower as a significant systemic vulnerability and notes that the 2023–24 drought forced prolonged electricity restrictions.

The hidden supply-chain lesson is:

A mine can have plenty of copper underground and still be unable to produce it because there is not enough water somewhere else to generate electricity.

UK Impact

Copper sits deep inside the UK economy.

It is required for:

• Electricity networks.
• Construction.
• Renewable-energy infrastructure.
• Electric vehicles.
• Electronics.
• Telecommunications.
• Industrial machinery.
• Data centres.
• Heating and cooling equipment.

UK businesses sourcing metals may understandably monitor:

• Mine output.
• Political stability.
• Transport.
• Sanctions.
• Commodity prices.

They may pay considerably less attention to how the mine receives its electricity.

That can create an upstream dependency several stages removed from the British purchaser.

A UK manufacturer may therefore believe its risk is copper availability when its true exposure is:

rainfall → reservoir level → electricity generation → mine production → refined copper → component supply.

Global Impact

The WMO says the current El Niño is expected to influence rainfall across multiple regions, although impacts vary geographically and forecasts indicate probabilities rather than certainties. Drier-than-normal conditions are considered more likely across areas including parts of the Indian subcontinent, southern and eastern Australia, Southern Central America and parts of the Caribbean, while other areas may experience wetter conditions.

Zambia illustrates how these weather patterns can feed directly into commodity supply.

The World Bank has previously estimated that hydropower represents the overwhelming majority of Zambia’s generating capacity and specifically identifies dependence upon variable rainfall as an energy-sector vulnerability.

Reuters reports that investors are again watching this relationship closely as the current El Niño strengthens, because previous drought-driven electricity shortages contributed to reduced copper production.

The lesson therefore extends far beyond Zambia.

Any commodity-producing region that depends heavily upon:

• Hydropower.
• River transport.
• Process water.
• Reservoir supplies.
• Water-intensive refining.

can transmit climate variability directly into industrial supply chains.

Our View

Businesses should start mapping energy dependency behind commodity dependency.

Companies should ask:

• Where are our critical raw materials mined?
• What powers those mines?
• Does processing depend upon hydropower?
• Is electricity supplied through a drought-sensitive grid?
• How much production can continue during load-shedding?
• Do mines have dedicated generation?
• Is that backup generation dependent upon diesel?
• Are alternative producers exposed to the same climate pattern?
• Could refining be affected even if mining continues?
• How much strategic inventory exists downstream?
• Does procurement monitor seasonal climate forecasts?
• Can long-term contracts accommodate prolonged production shortfalls?

This demonstrates why supply-chain mapping increasingly needs to go beyond suppliers and sub-suppliers.

Businesses may need to understand the infrastructure that supports those suppliers as well.

A copper shortage may begin with neither a mine accident nor a geopolitical crisis.

It can begin with rain that never falls into a reservoir hundreds of miles away.

Risk Indicator: ELEVATED

Disclaimer

The information contained within these Market Alerts is provided for general market awareness and informational purposes only. It does not constitute financial, legal, investment, regulatory or insurance advice. Whilst every effort has been made to ensure accuracy at the time of publication using multiple reputable and independently verified sources, geopolitical events, legislation, regulation and market conditions may change rapidly. Readers should obtain appropriate professional advice before acting upon any information contained herein.

Invictus Risk Solutions LLP – Helping organisations stay ahead of emerging risks through informed insight and independent analysis.