Geopolitical uncertainty, a slower but irreversible energy transition and continued capital discipline will define conditions in the global metals and mining sector this year, consultancy Wood Mackenzie’s (WoodMac’s) ‘2026 Metals and Mining Outlook’ shows.

“2026 will be a year of navigating complexities. The fundamental shift from molecules to electrons continues to drive a metals-intensive era, but the pace of this evolution is being dictated by a new geopolitical reality and a disciplined approach to capital allocation despite emerging opportunities,” WoodMac global copper markets research director Peter Schmitz said in a January 20 statement.

WoodMac’s outlook said the global trade environment for critical minerals would be shaped by major political and economic developments in both hemispheres during the year.

In China, the release of the country’s fifteenth five-year plan in the first half of the year is expected to signal a shift away from infrastructure-led growth towards policies aimed at stimulating consumer activity.

“China’s balancing act between stimulating consumption and managing deflation will be a defining factor for commodity demand. The outcome will determine whether we see expanded consumer trade-in programmes or more cautious, resilience-focused policies,” Schmitz said.

In the US, WoodMac said, the mid-term elections in November were likely to complicate fiscal policy decisions, while continued market volatility linked to tariff measures and a pending China trade deal were expected to add further uncertainty for commodity markets through the year.

Despite these political headwinds, WoodMac said, the global energy transition had reached critical mass and was continuing independently of election cycles. The firm did, however, revise its base case climate outlook to 2.6 ºC from 2.5 ºC, reflecting a slower global pace of decarbonisation.

The firm said renewable energy was expected to remain central to global energy security, while technological developments this year were likely to reshape expectations for battery materials.

WoodMac said progress towards the commercialisation of solid-state batteries could alter demand profiles, while the growing use of AI was expected to clarify its implications for markets and material consumption. The firm noted the potential emergence of a Jevons paradox, where efficiency gains result in higher overall commodity demand.

Within the metals complex, WoodMac said, copper remained exposed to supply disruptions, but most other subsectors were expected to remain in oversupply throughout the year, placing downward pressure on prices.

Meanwhile, gold and silver are projected to benefit from continued central bank buying and safe-haven demand.

On the investment side, WoodMac said mining companies were expected to maintain a cautious approach despite emerging opportunities. The firm said this restraint was aimed at avoiding market oversupply and was leading companies to prioritise shareholder returns and mergers and acquisitions (M&A) over new project development.

This approach was being reinforced by growing competition from State-backed Chinese investors, which WoodMac said often operated with different risk tolerances and longer-term investment horizons than Western miners.

The firm also warned of the risk of demand destruction in markets where supply could not be increased quickly, potentially forcing manufacturers to switch to alternative materials.

“We are already seeing this dynamic in the competition between copper and aluminium. When prices remain elevated and supply is constrained, the incentive for material substitution grows. Trade barriers further intensify this risk by limiting global consumption and delaying critical investment decisions,” Schmitz said.

WoodMac added that resource-rich countries were becoming more selective when choosing development partners, contributing to delays in bringing new supply to market.

As a result, the firm expected smaller and more agile companies to take a leading role in developing new projects, while larger mining groups focus on consolidating and optimising existing assets.