A global copper supply shortfall is set to widen dramatically over the next decade as accelerating electrification, artificial intelligence and rising defence spending collide with declining mine supply, according to a new study by S&P Global.
In its report Copper in the Age of AI: Challenges of Electrification, S&P forecasts global copper demand will rise from 28 million metric tonnes in 2025 to 42 million metric tonnes by 2040.
However, without major investment in new mining capacity, supply is projected to fall well short, leaving a deficit of roughly 10 million metric tonnes by 2040, equivalent to 25 per cent of expected demand.
S&P vice chairman Daniel Yergin said that copper’s essential role in electrification has turned the metal into a strategic asset for economic growth and technological progress.
“Economic demand, grid expansion, renewable generation, artificial intelligence (AI) computation, digital industries, electric vehicles (EV) and defence are scaling all at once, and supply is not on track to keep pace,” he said.
The report identified four primary demand drivers, including the energy transition and renewables, EVs, AI, and defence, as well as traditional construction and manufacturing.
AI and data centres represent the fastest emerging new demand sector, with S&P estimating data centre capacity will more than quintuple by 2040, thus driving massive expansion in power infrastructure and copper-intensive electrical systems.
The study also projects global electricity demand will increase nearly 50 per cent by 2040, requiring the equivalent of roughly 650 one-gigawatt nuclear reactors of new power generation capacity.
When it comes to “closing the supply gap”, S&P said that this will ultimately depend on the development of new mines and the expansion of existing assets.
Also by 2040, the study said that an additional 10 million metric tonnes of this “primary supply”, will be required, on top of increased recycling; however, global primary supply could produce just 22 million metric tonnes by 2040, one million metric tonnes less than today.
“Primary production, mining, remains the irreplaceable foundation of copper supply,” said Eleonor Kramarz, global head of Critical Minerals and Energy Transition Consulting from S&P.
“Bridging the impending supply gap depends not only on geology, engineering, and logistics and investment, but also on governance and policies.
“That translates into timelines in permitting and consultation, a time clock on litigation and stability in governance and regulation.”
Kramarz said that the only alternative to this is uncertainty, and that uncertainty “comes at a hefty cost”.
Building on this demand, S&P detailed that EVs use almost three times more (2.9 times) copper than a conventional car, and global renewable capacity additions remain heavily copper-dependent across solar, wind, and battery storage systems.
On the supply side, S&P warns existing copper mines face declining ore grades, rising costs and lengthy development timelines, averaging 17 years from discovery to production.
Without new projects, primary mined copper supply is expected to peak in 2030 before declining to below current levels by 2040.
Recycling growth will help, with recycled copper supply forecast to rise from four million metric tonnes today to around 10 million metric tonnes by 2040, but S&P says this alone cannot close the looming gap.
Compounding risks, the study highlights heavy concentration in global processing capacity, with China controlling around 40 per cent of smelting operations, increasing vulnerability to geopolitical and trade disruptions.
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