Geopolitics, tight investment to shape mining: WoodMac

Geopolitical shifts, a rewired energy transition and disciplined capital allocation will define the global metals and mining sector in 2026, according to Wood Mackenzie.

“2026 will be a year of navigating complexities,” Peter Schmitz, director of global copper markets research at the consultancy, said in an outlook published on Tuesday. The long-term shift from fossil fuels to electrification continues but is increasingly shaped by politics and investor restraint, he said. 

At the top of WoodMac’s outlook is a more volatile global economic backdrop driven by developments in China and the U.S. 

The consultancy expects China’s 15th Five-Year Plan, due in the first half of the year, to signal a move away from infrastructure-led growth towards policies aimed at supporting consumer demand. How Beijing balances consumption stimulus against deflation risks will be critical for commodity markets.

“China’s balancing act between stimulating consumption and managing deflation will be a defining factor for commodity demand,” Schmitz said, adding that outcomes could range from expanded consumer trade-in programmes to more conservative, resilience-focused policies.

US role

In the U.S., mid-term elections in November are expected to complicate fiscal policy and add uncertainty to markets. Tariff-related volatility and the unresolved trajectory of US-China trade relations are likely to weigh on investment decisions through November.

Despite these headwinds, Wood Mackenzie says the energy transition has reached a point where it continues largely independent of political cycles. Even so, the firm has revised its base-case warming outlook from 2.5 to 2.6 degrees, reflecting a slower global pace of decarbonization. Renewable power remains central to energy security, but the path forward is less linear than previously assumed.

Technology developments expected in 2026 could reshape demand for key battery materials as solid-state batteries move closer to commercialization. The growing role of artificial intelligence is also set to clarify how data centres and automation affect power consumption and metals use, raising the possibility of a Jevons paradox, where efficiency gains ultimately drive higher overall demand.

Commodity-specific outcomes will vary. Copper remains a standout due to ongoing supply disruptions, while most other metals markets are expected to remain oversupplied through 2026, keeping prices under pressure. Gold and silver are likely to benefit from continued central bank buying and their role as safe-haven assets during periods of uncertainty.

Capital caution

On the investment side, Wood Mackenzie expects mining companies to remain cautious, favouring capital returns and mergers and acquisitions over new greenfield developments. The consultancy sees this discipline as a response to past cycles of over-investment, but also as a necessity in a market increasingly shaped by competition from state-backed Chinese firms with longer time horizons and higher risk tolerance.

The firm also flags the risk of demand destruction where supply constraints keep prices elevated for extended periods. Manufacturers may turn to substitute materials if supply cannot respond quickly enough, a trend already visible in the growing competition between copper and aluminium.

“When prices remain high and supply is constrained, the incentive for material substitution grows,” Schmitz said, noting that trade barriers can intensify this dynamic by restricting global consumption and delaying investment decisions.

Rising resource nationalism adds another layer of complexity. As resource-rich countries become more selective about development partners, project timelines are stretching out. Wood Mackenzie expects smaller, more agile companies to play a greater role in advancing new projects, while major miners focus on consolidating existing assets.

The consultancy’s 2026 outlook examines how these themes will play out across base and precious metals, battery raw materials, bulk commodities and steel alloys, offering a commodity-by-commodity view of where risks and opportunities are likely to emerge.