Metals in a Fractured World: Opportunity, Risk, and the Long Cycle

The global metals market finds itself at a crossroads. Conflict in the Middle East continues to keep supply chains unsettled, and the Trump administration’s push to reprice critical minerals as strategic assets, effectively tying their access to artificial intelligence (AI) infrastructure ambitions, has added fresh tension to the market. 

Meanwhile, rapidly growing AI adoption and the energy transition continue to increase demand for base metals like copper and aluminium, pushing their prices higher. 

Geopolitics is causing price fluctuations beyond what supply and demand can account for, as supply chains become increasingly fragmented by region and new technologies fuel structural demand. Mining companies are now confronted with a marketplace that is noticeably unlike that of a decade ago.

Geopolitical conflict and market fragmentation: volatility as the new normal

The significant volatility experienced in global metals markets today arises from two main factors: the ongoing energy transition and a rapidly evolving geopolitical environment. As countries choose to bypass international frameworks in favour of advancing their own agendas, the effect is spreading through both the energy and commodities sectors. 

In this environment, uncertainty is the only constant. While this creates opportunities, it can also pose serious challenges for companies.  

Metal prices typically follow a recognisable pattern. When geopolitical or war risks increase, gold price usually rises first, then silver, followed by copper and aluminium, minor metals, and finally ferrous metals. The rotation demonstrates how markets assess the development of a conflict cycle. Minor metals constitute a distinct category; their prices are largely determined by the geographical origin of their supply. When production takes place within or near conflict zones, price volatility is usually considerable. 

In the past, single day price fluctuation of 3%-5% in precious metals was already considered rare. However, since 2026, gold has experienced declines of nearly 10% in a single day, while silver has seen drops exceeding 20%. Prices of minor metals have been even more volatile. Such volatility makes cost control, pricing, and risk management challenging for businesses and drives inflation for end users.

Various minor metals are exhibiting different price trajectories. Those involved in defence and military supply chains are seeing price rises as geopolitical tensions mount. Conversely, metals not linked to military use and sourced from stable regions have prices that remain comparatively steady; any fluctuations here are primarily driven by liquidity and market speculation rather than shifts in supply and demand.

A notable transition is underway from global commodity pricing to regional approaches. Historically, commodities were priced globally, with close alignment across markets such as London, New York, and Shanghai. However, due to tariffs, geopolitical strains, and interruptions in supply chains, prices are becoming increasingly fragmented. For individual countries, this segmented pricing serves to protect domestic interests, but on a global scale, it diminishes market efficiency and results in higher costs.

Aluminium and copper: electrification and computing drive demand

Among various metals, aluminium and copper are notable for their significance in both the energy transition and the growth of digital infrastructure. 

The Middle East boasts over seven million tonnes of electrolytic aluminium capacity. The region gains an advantage from affordable natural gas, which is significant as electricity accounts for more than 30% of the overall production cost of electrolytic aluminium. Nevertheless, the Middle East relies considerably on imported alumina, and ongoing developments in Iran present two principal risks: production could be suspended for safety purposes, and supply routes for raw materials might be disrupted. These issues have contributed to expectations of an aluminium supply shortage, resulting in higher prices. 

Aluminium demand is experiencing a structural shift; it can replace copper or be used as aluminium-clad copper where high conductivity is not required. Meanwhile, China has imposed a cap on electrolytic aluminium production. With demand increasing and supply regulated, industry margins have remained robust—the profit margin exceeded 30% in 2025. Prices over US$3,000 per tonne continue to make the sector economically attractive. 

Copper has different drivers. While actual copper consumption in AI infrastructure is somewhat limited, there are market expectations that the metal will play a major role in the AI infrastructure push—the idea that future competition turns on electricity and computing power, and both require copper at scale. In practice, a significant increase is being priced in by the markets. Heavy investment in power infrastructure in the US and elsewhere is expected to result in sustained copper demand. 

Indonesia's resource strategy is worth paying attention to in this context. The nickel- and bauxite-rich country is using the RKAB mining quota system to manage supply carefully. When nickel prices fall, the quota is tightened to stabilise the market. Indonesia’s ambitions extend beyond exports. The government is pushing downstream as it seeks to develop higher-value industries—from nickel ore to new energy batteries, and from bauxite to electrolytic aluminium. Having applied this model to nickel, there’s a fair chance Indonesia will also look to do the same with aluminium: manage supply discipline, attract foreign technology, and build a more complete industrial chain.

Help the mining industry through the cycle

The role of financial institutions in this sector is changing. Banks are no longer simply providers of capital; instead, they have become strategic partners helping companies work through cycles. In the context of the fragmentation in the global commodity market, financial institutions with deep sectoral expertise can provide enterprises with valuable geopolitical risk assessment, help interpret regulatory shifts, and help mining clients navigate changing policy environments and growing resource nationalism. 

DBS has extensive experience in the metals and mining sector, providing full-cycle financial services covering listings, bond issuance, project finance, trade finance, foreign exchange, and commodity futures hedging. In the aluminium sector, the bank has provided financial advisory and project finance for several significant transactions, such as Weiqiao's alumina project in Indonesia and a nickel smelting project jointly held by Liqin and Halida.

One stand-out project is Indonesia's first Sino-Indian joint venture HPAL project, an important milestone in Indonesia's nickel industry. This was an early stage bet at a time when the technology was unproven and market uncertainty still high. Most banks held back with a wait-and-watch attitude. DBS, drawing on its deep metals expertise and strong understanding of the Indonesian market, led the financing for the project. The project has strengthened Indonesia’s nickel industry and also embellished DBS’ reputation as a bank willing to back long-horizon transactions. 

To serve mining clients more effectively, DBS has built a dedicated industry group focused on three things: 

• The first is connectivity. DBS helps clients find the right partners upstream and downstream. For example, when Chinese companies look to invest in Indonesia, the bank draws on its local branch network and market knowledge to help them find suitable partners. 
• The second is financing structure. Project finance in mining is a complex evaluation process, based on the participants’ financial strength, whether the technical content and equipment of the project itself are advanced, whether ESG standards are met, and the balance of upstream and downstream supply and demand. DBS designs structures that minimise compliance and execution risk while reducing the cost of capital. 
• The third is risk management. DBS provides hedging across foreign exchange, interest rates, exchange rates and commodities, helping clients manage exposure to volatility. With expectations around US dollar interest rate cuts difficult to predict, currency and rate risk management have become critical parts of project planning.  

Additionally, DBS brings geographic research, which allows the bank to support customers' cross-border acquisitions, investments, and partnerships. The bank supports clients on capital flows, regulatory compliance, and with local market requirements across borders. Market experience and knowledge on key players provides DBS’ clients with an information advantage that can complement their own technical expertise. 

Even amidst the rapid change witnessed in the markets, the fundamentals of good banking haven’t changed. For mining companies and their financial partners, the ability to navigate a full cycle rests on the same foundations: a deep understanding of the industry, a clear understanding of risks, and an adherence to long-termism.