Copper cathode sheets at the KGHM Polska Miedz SA copper smelter in Glogow, Poland, on Thursday, April 24, 2025. Poland’s government reduced its economic growth target for this year, citing external risks such as US trade policies and the war in Ukraine. Photographer: Damian Lemanski/Bloomberg
The global demand for copper is set to escalate significantly due to the growing needs of artificial intelligence (AI) and increased defence spending, according to a recent study by S&P Global. As producers face challenges in expanding their operations, a projected shortage of copper could emerge, potentially hindering economic growth and technological advancements.
In its report released on October 5, 2023, S&P Global highlighted that demand for copper is accelerating at a time when mine supply is constrained. The price of copper has already surged to record highs, exceeding $13,000 per metric tonne in London. This increase is attributed to mine outages and stockpiling activities by traders in the United States, particularly in anticipation of potential tariffs from the Trump administration.
While traditional sectors such as construction, appliances, and transportation continue to drive copper demand, emerging sectors are expected to contribute significantly to growth. Aurian De La Noue, head of energy transition and critical metals consulting at S&P Global, noted that AI and data centers were not major factors in the market just three years ago. The study indicates that the world is on track for a supply deficit, even before accounting for these new demand drivers.
Future Demand Projections
S&P Global predicts that global copper demand will rise by 50 percent from current levels, reaching 42 million metric tonnes by 2040. The report emphasizes that the largest share of this growth will come from energy-transition applications, including electric vehicles, renewable energy, batteries, and grid expansion.
Moreover, the study anticipates a significant increase in copper consumption linked to data centers and AI infrastructure. The installed capacity of data centers worldwide is expected to increase nearly fourfold by 2040, with demand from AI and defence spending potentially tripling, contributing an additional 4 million tonnes to the market.
Another potential source of demand identified in the report is humanoid robots. By 2040, if there are 1 billion humanoid robots in operation, they could require approximately 1.6 million metric tonnes of copper annually, which represents about 6 percent of current consumption levels.
Supply Challenges Ahead
Despite these optimistic demand forecasts, worldwide copper production is projected to peak at about 33 million tonnes by 2030. The decline in ore quality at existing mines, coupled with the complexities of permitting, financing, and constructing new projects, poses significant challenges for the industry. This could result in a substantial gap of 10 million tonnes between supply and demand, even considering a projected doubling of recycled copper output.
While the anticipated supply deficit remains largely theoretical, it underscores the importance of available resources. Rising prices may encourage manufacturers to substitute copper in some products, and ongoing supply expansion projects could become more lucrative. Nonetheless, the challenges of long development timelines, escalating costs, and a concentrated supply chain leave the market vulnerable to disruptions as demand continues to rise.
The soaring prices are beneficial for the mining industry, but Daniel Yergin, Vice Chairman of S&P Global and co-chair of the study, cautioned against assuming that current price levels will stabilize. He stated, “We would be reluctant to say that this proves now that prices are on a stable higher plane.”
Funding for the study came from some of the largest players in the mining sector, including BHP Group and Rio Tinto Group, along with traders such as Trafigura and Gunvor, as well as tech giant Google. The implications of these findings could reshape the landscape of copper demand and supply in the coming years, highlighting the need for strategic planning in both production and consumption.
