BHP, the world’s largest mining company, has raised concerns about the impact of artificial intelligence (AI) on global copper demand. The company’s chief financial officer, Vandita Pant, has warned that the growth of AI and the transition to clean energy could exacerbate an impending copper shortage. With copper playing a critical role in powering data centers, electric vehicles (EVs), and renewable energy systems, the availability of this metal has become a pressing global issue.
Pant reported to the Financial Times that BHP predicts a 72% increase in global copper demand by 2050, rising from 30.4 million tons in 2021 to 52.5 million tons annually. This surge is driven by the growing need for copper in EVs, solar farms, and data centers powered by AI technologies. Pant highlighted that data centers, currently accounting for less than 1% of copper demand, are expected to make up 6 to 7% by 2050. The energy-intensive computing required for AI applications is projected to increase copper demand by an additional 3.4 million tons annually by 2050. Copper is vital for the power transmission and cooling systems that support these facilities, intensifying competition for the metal.
BHP’s concerns about a global copper shortage add to the ongoing discussion about the future of copper supply. A medium to long-term shortfall is anticipated, prompting mining companies to secure access to copper deposits. Earlier this year, BHP’s bid to acquire major copper producer Anglo American was rejected, but the company continues to invest heavily in copper assets. In July 2024, BHP partnered with Canada’s Lundin Mining to acquire Filo Corp. for $3 billion, securing copper-rich assets in Chile and Argentina. Despite these efforts, global copper inventories have been declining, with copper stock in CME warehouses falling by 71% between March and July, reaching their lowest levels since 2008.
The slow development of new copper mines poses a challenge in meeting rising demand, as it takes more than a decade to establish a project. This supply lag could lead to a significant copper shortage in the coming years. While the long-term outlook for copper remains strong, short-term challenges persist in the market. Weak demand from China, the largest consumer of copper, has contributed to a 15% decline in copper prices this year, currently trading at around $9,207 per tonne.
Analysts and mining executives believe that copper demand remains robust, driven by the energy transition towards renewable energy and electrification. BHP anticipates a spike in copper demand as the world progresses towards net-zero goals, especially in developing countries. Major mining firms like Anglo American, Southern Copper, Vale, Ero Copper, Rio Tinto, Antofagasta, Freeport-McMoRan, and Glencore have gained attention on the London Stock Exchange as copper prices rise.
The influence of AI and the energy transition is reshaping the global copper market, emphasizing the need to secure copper resources for the future. As industries prepare for the impending copper shortage due to AI-driven data centers and clean energy solutions, sustainable mining practices and resource management innovations have become crucial. Copper, once primarily used in traditional industries, is now at the forefront of the global energy transition.
The race to secure copper mines is on, with mining giants like BHP positioning themselves to meet the evolving needs of the tech world. However, the question remains: Will the supply of copper keep pace with the rapid advancements in AI and the shift towards renewable energy? The future of copper demand in the age of AI and clean energy remains uncertain, but industry players are gearing up for the challenges ahead.
