Growing Global Demand Raises Worries About Copper Shortages
Copper prices have been climbing since July last year, reaching up to $5.96 per pound amid supply worries, remaining near record levels.
Global electricity consumption is projected to grow by nearly 50% by 2040, with worldwide copper demand expected to increase at a similar rate, from 28 million metric tons currently to 42 million tons, according to S&P Global’s report, “Copper in the Age of AI: Challenges of Electrification,” published January 8.
The report attributes the expected surge in copper consumption to basic economic demand, energy transition, expansion of energy sources, artificial intelligence (AI) and data centers, and the modernization of defense systems.
Economic activity and the shift toward clean energy are anticipated to be the main drivers of copper use through 2040, with China and the Asia-Pacific region leading the global demand.
AI and data centers have emerged as a new source of consumption due to their high electricity needs, direct copper use, and rapid expansion. Asia is expected to account for 60% of this increased demand in AI and data centers, while North America and Europe are projected to see smaller but notable growth amid digitalization and clean energy initiatives.
The report warns of a potential supply gap of around 10 million metric tons of copper by 2040 if risks in production are not mitigated and investment is insufficient.
Declining ore quality is making mining more challenging and expensive in major production regions such as South America. While recycling may provide up to a quarter of total copper demand by 2040, it will not close the projected gap, meaning primary copper production will remain crucial.
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