Rising copper demand triggers supply concerns
EL.KZ Информационно-познавательный портал
Rising demand for copper, one of the most widely used metals in industry and technology, has given way to concerns that there may be a supply shortage in the coming period as demand is expected to surge 50% by 2040, El.kz reports citing Anadolu.
Copper prices have continued to rise since July last year, reaching as high as $5.96 per pound amid supply concerns, hovering around record figures.
Global electricity consumption is estimated to rise nearly 50% by 2040, while copper demand worldwide is expected to rise at the same rate or even more, up from 28 million metric tons currently to 42 million tons, according to S&P Global’s “Copper in the Age of AI: Challenges of Electrification,” published on Jan. 8.
Basic economic demand, energy transition and the expansion of energy sources, artificial intelligence (AI) and data centers, and the modernization of defense are behind these estimates.
The essential economic demand and energy transition will be the largest drivers of copper consumption through 2040, with China and the Asia-Pacific leading the world in demand, according to the report.
AI and data centers make up a new area of demand due to their intensive electricity needs, direct copper usage, and rapid growth. Asia is expected to account for 60% of the increased demand in AI and data centers, while smaller but still significant rises may be seen in North America and Europe amid digitalization and efforts for clean energy.
The report expects a supply gap of some 10 million metric tons of copper by 2040 if no improvements are made to surface risks or significant investments.
The average quality of copper ore has deteriorated, complicating mining operations as well as making it more expensive to mine in major production regions like South America.
The report estimates that recycling could meet a quarter of the total demand by 2040, but it won’t be able to close the gap and supply from primary sources will be vital.
The copper supply chain is highly concentrated, which renders it vulnerable to global supply disruptions, policy shocks, and complex trade barriers, according to the report.
The average time that passes between discovery to production for a copper mine is 17 years, the report said, and a large portion of this time is allocated to securing permits, assessing the environment and making public consultations.
Inflation, low ore quality, and the rising costs of mining activities in deeper regions are on the rise, while ever-changing government conditions, tariffs and other regulatory frameworks fuel uncertainties and slow down investments and project development.
The report notes that the industry is facing a growing skill gap due to more retirements happening than new hires, as well as falling enrollment in technical programs at universities.
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