The rapid expansion of artificial intelligence (AI) is set to significantly worsen the anticipated shortage of copper, a metal crucial for the clean energy transition.
BHP, the world’s largest mining company, has raised alarms about the increasing demand for copper driven by the rise of data centres and energy-intensive computing.
Key Takeaways
- BHP predicts global copper demand could rise by 3.4 million tonnes annually by 2050 due to AI.
- Current copper demand from data centres is less than 1%, expected to increase to 6-7% by 2050.
- Global copper demand is projected to surge to 52.5 million tonnes per year by 2050, a 72% increase from 2021.
- Weak demand in China has led to a 15% drop in copper prices this year.
The Impact of AI on Copper Demand
BHP’s Chief Financial Officer, Vandita Pant, highlighted that the growth of AI and data centres will significantly increase global copper demand. Currently, data centres account for less than 1% of copper demand, but this figure is expected to rise to between 6% and 7% by 2050. This shift is primarily due to the energy-intensive nature of AI applications, which require more copper for power supply and cooling systems.
Future Projections
BHP anticipates that global copper demand will escalate to 52.5 million tonnes annually by 2050, up from 30.4 million tonnes in 2021. This represents a staggering 72% increase, driven by the need for copper in various industries, including:
- Power cables
- Electric vehicles
- Solar farms
The Race for Copper Resources
The looming copper shortfall has sparked a competitive race among mining companies to secure access to copper mines. BHP’s recent attempts include:
- An unsuccessful £39 billion bid for Anglo American earlier this year.
- A $3 billion acquisition of Filo Mining, which has promising copper prospects.
Market Conditions and Challenges
Despite the optimistic long-term projections, current market conditions reflect uncertainty. Weak demand in China, the largest consumer of copper, has led to a decline in prices, which are currently trading at approximately £9,207 per tonne—15% lower than their peak in May. BHP forecasts indicate that the copper market will remain in surplus this year and next due to poor demand, but this trend is expected to reverse towards the end of the decade.
Conclusion
As the world navigates the implications of AI and the transition to clean energy, the mining industry faces significant challenges in meeting future copper demand. BHP’s warnings underscore the complexities that lie ahead, as the copper market is poised for a significant transformation. Vandita Pant emphasised the need for the industry to prepare for these changes, stating, "The copper market is poised for significant transformation, and we must prepare for the complexities it will bring to our industry and beyond."
Sources
- BHP warns AI growth will worsen copper shortfall, Financial Times.
- BHP Warns AI Boom Could Worsen Copper Shortage | Mining Digital, Mining Digital.
