Copper deficit sparks market opportunity

A looming copper supply gap is set to create significant opportunities for investors and producers as demand surges across electrification, AI and defence sectors, according to a new S&P Global study.

Copper in the Age of AI: The Challenges of Electrification projects global copper demand will climb 50 per cent to 42 million metric tons by 2040. With production expected to peak at 33 million metric tons in 2030, the resulting 10 million metric ton deficit underscores potential market upside for mining, smelting and recycling investments.

“Here, in short, is the quandary: copper is the great enabler of electrification, but the accelerating pace of electrification is an increasing challenge for copper,” S&P Global vice chair Daniel Yergin said.

“Economic demand, grid expansion, renewable generation, AI [artificial intelligence] computation, digital industries, electric vehicles [EVs] and defence are scaling all at once and supply is not on track to keep pace. At stake is whether copper remains an enabler of progress or becomes a bottleneck to growth and innovation.”

Bridging the supply gap will depend on new mine development, recycling expansion and policy support.

“Primary production – mining – remains the irreplaceable foundation of copper supply,” S&P Global Energy global head of critical minerals and energy transition consulting Eleonor Kramarz said. “Bridging the impending supply gap depends not only on geology, engineering and logistics and investment but also on governance and policies.”

The S&P Global study also flags market risks from supply concentration, with six countries responsible for roughly two-thirds of mined copper and China controlling much of processing capacity. For market participants, this creates volatility and opportunity.

S&P Global said timely investment in mines, smelting and recycling could capture the copper deficit, as the metal continues to underpin electrification, AI, EVs and defence spending worldwide.