Growth in the artificial intelligence and defense sectors will boost global copper demand 50% by 2040, but supplies are expected to fall short by more than 10 million metric tons annually without more recycling and mining, the consultancy S&P Global said on Thursday.
Copper has long-been used widely across the construction, transportation, tech and electronics industries as it is one of the best electricity-conducting metals, is corrosion-resistant and is easy to shape and form.
While the electric vehicle industry has lifted copper demand the past decade, the AI, defense and robotics industries will require even more of the metal during the next 14 years alongside traditional consumer appetite for air conditioners and other copper-hungry appliances, S&P said in its report, opens new tab.
Demand globally will reach 42 million metric tons per year by that 2040 mark, up from 28 million metric tons in 2025, the report found. Without new sources of supply, nearly a quarter of that demand is likely to be unmet, the report found.
“The underlying demand factor here is electrification of the world, and copper is the metal of electrification,” Dan Yergin, S&P’s vice chairman and one of the report’s authors, told Reuters.
AI is a major growth area for copper, with more than 100 new data center projects last year valued at just under $61 billion, Reuters reported last month.
The conflict in Ukraine and moves by Japan, Germany and others to increase defense spending are likely to also fuel copper demand, the report found.
“Demand for copper really is inelastic in the defense sector,” said Carlos Pascual, an S&P vice president and former U.S. ambassador to Ukraine.
Nearly every electronic device contains copper. Chile and Peru are the largest copper miners, and China is the largest copper smelter. The United States, which has imposed a tariff on some types of copper, imports half of its needs each year.
The report does not factor in potential supply from deep-sea mining.
S&P published a similar report in 2022 that forecasted copper demand should the world reach carbon neutrality by 2050, a goal described as “net zero.”
The report released on Thursday uses a different methodology, S&P said, and forecasts demand using a base-case assumption that copper demand will rise regardless of government climate policy.
“The politics of the energy transition have changed pretty dramatically,” Yergin said.