Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
The world is on track for a copper shortage that would pose a “systemic risk” to global economic growth, driven by the energy transition and the booming artificial intelligence sector’s demand for the red metal, according to S&P Global.
The looming deficit is forecast to reach 10mn tonnes — equivalent to almost one-third of current global demand — by 2040, in the absence of a “meaningful expansion of supply”, said the data group in a report on Thursday.
This constitutes a “systemic risk for global industries, technological advancement and economic growth”, it warned.
Copper, which has hit a series of record highs since October amid a broad surge in metals prices, is increasingly in demand, including for the construction of AI data centres and to build the grid infrastructure to power these facilities and the green transition. A meaningful shortage of the metal is seen by analysts as likely to threaten the growth of both sectors.
“Copper is the great enabler of electrification, but the accelerating pace of electrification is an increasing challenge for copper,” said Daniel Yergin, vice-chair of S&P Global, who co-chaired the study.
“At stake is whether copper remains an enabler of progress or becomes a bottleneck to growth and innovation,” he added.
The price of copper has surged from just over $8,000 per tonne in April to more than $13,000, driven by concerns over disruptions at major mines and tariffs. Among other metals, gold and silver have hit record highs in recent weeks, while nickel is up by more than one-quarter since mid-December and this month reached its highest level since mid 2024.
On current trends, global copper production will peak in 2030 before falling again even as demand continues to rise, said S&P. Many copper mines are ageing and becoming less productive, and it can take years and huge investment to find and open new facilities.
S&P expects a “transformative” increase in global copper demand, which it forecasts will rise from 28mn tonnes last year to 42mn in 2040. Asia is expected to account for 60 per cent of demand growth over that period, driven by factors such as the swift adoption in the region of electric vehicles and upgrading the power grid to increase capacity and tap renewables.
Meanwhile, demand for copper for data centres — including for AI and robotics — could rise from around 1.1mn tonnes in 2025 to 2.5mn tonnes by 2040, said S&P. “Access to copper is critical for the AI boom to take off and for the data centre build-out to occur,” it added.
As the development of AI becomes a “national security issue” for the US and China, “it’s going to be an absolute requirement that they can make the investments in electrification, and with that the copper that’s necessary to be able to sustain that supply”, said Carlos Pascual, senior vice-president of geopolitics and international affairs at S&P Global Energy.
“The challenges are going to be who can actually gain that access to electricity, at what cost,” he added.
Prolonged shortages of commodities are rare, as they typically push up prices, which can weigh on demand, push buyers to look for substitutes or incentivise new production.
The looming shortfall takes into account growth in copper scrap recycling, which could see global production of 10mn tonnes by 2040, said the report. As such, closing the gap will require a “concerted effort” to increase mined supply from 23mn tonnes in 2025 to at least 32mn by 2040, it said.