The global energy transition is running into supply constraints, and copper sits at the center of that problem. The latest research from BloombergNEF shows that the orange metal is facing a structural shortage, as surging demand overwhelms chronically slow supply growth.
According to the Transition Metals Outlook 2025, this cycle is different. Unlike prior cycles fueled by short-term speculation, the copper deficit stems from long-lived infrastructure needs that are colliding with geological, regulatory, and geopolitical realities.
Copper faces the most acute long-term pressure, as a boom in copper-intensive data centers coincides with mine disruptions and slow permitting, the report points out.
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Each hyperscale data center requires vast amounts of copper for power delivery, cooling, and grid connections, adding a new layer of structural demand on top of the energy transition.
Shortage in Every Scenario
On the supply side, the pipeline is failing to keep up. Mine disruptions in Chile, Peru, and Indonesia have highlighted the fragility of existing production, while new projects face permitting timelines that stretch well beyond a decade.
Without rapid acceleration in production, analysts expect a cumulative deficit of around 19 million metric tons by 2050. Notably, every scenario sees the deficit start from 2026. Therefore, copper becomes a long-term constraint and not a cyclical trade.
Meanwhile, other transition metals show a different situation. Lithium and cobalt remain in a short-term surplus owing to aggressive capacity additions and recycling growth. Manganese supply remains on a demand trajectory through mid-century, while aluminum faces regional constraints. Its case is tied to China’s production cap, limiting flexibility, even as India raises its output.
The Next Deficit
While the market is panicking about copper, graphite is emerging as the next metal, quietly moving toward a shortage. Its demand is expected to rise from about 2.7 million tons in 2025 to 6.7 million tons by 2050. The demand driver is the lithium-ion battery anodes in electric vehicles and energy storage systems.
BloombergNEF expects the graphite market to slip into a technical deficit around 2032 as growth in primary supply slows and secondary supply from recycled batteries fails to scale fast enough. The shortfall is particularly acute outside China, which dominates both natural and synthetic graphite processing, leaving the US and Europe heavily exposed.
Influencing Market Dynamics
As supply paths diverge, investment trends follow. Capital and policy attention increasingly flow toward metals with both demand certainty and supply risk.
Copper fits that profile most cleanly, which explains the surge in M&A activity and capex spending by mining majors. Yet rare earth elements continue to receive the most policy focus, mainly because China’s dominance in their refining is near-total and their applications span defense, electronics, and clean energy.
The common thread is geopolitics. China still controls much of the world’s midstream refining across copper-adjacent metals like graphite, cobalt, and manganese. Governments can unlock capital through subsidies and incentives.
Still, BloombergNEF warns that without faster permitting, recycling, and upstream decarbonization, material shortages will increasingly define the pace and cost of the energy transition.
Price Watch: Sprott Critical Materials ETF (NASDAQ:SETM) is up 82.68% year-to-date.
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