S&P Global’s new report, Copper in the Age of AI: The Challenges of Electrification, warns that copper demand could surge 50 percent by 2040, reaching 42 million tonnes as the global push for electrification accelerates.
Supply, however, is projected to fall short, creating a 10 million tonne deficit, roughly 25 percent below demand , even as production peaks at 33 million tonnes in 2030.
The looming shortfall signals major opportunities for investors, but experts caution that production must ramp up now to avoid a deepening supply gap later.
Meeting demand through supply
‘Primary production—mining—remains the irreplaceable foundation of copper supply,’ said Global Head of Critical Minerals and Energy Transition Consulting at S&P Global Energy Eleonor Kramarz.
‘Bridging the impending supply gap depends not only on geology, engineering, and logistics and investment, but also on governance and policies. That translates into timeliness in permitting and consultation, a time clock on litigation and stability in governance and regulation. The alternative is uncertainty, and uncertainty comes at a hefty cost.’
The report added that output from existing mines will keep declining without significant new investment.
Recycling is regarded as the “secondary supply,” but however provides at best only about a third of the total supply by 2040.
Processing also remains critical in this scenario. Smelting and refining capacity is still concentrated in China, accounting for about 40 to 50 percent total capacity or 12 of the 29 million metric tons to be specific.
“(This) geographic concentration amplifies systemic risks and exposes the supply chain to geopolitical shocks.”
“While recycling could possibly meet up to a quarter of total demand by 2040, it cannot close the gap – primary mined supply remains essential,” the report concluded.
Copper and electrification
S&P Global wrote that copper also plays a huge role in meeting the growing requirements of electrification and technologies such as AI and data centers.
It noted that while AI is not creating the largest of copper demand, its requirements highlight the need for expanded electricity supply.
Still, there is a need to hold space for how AI will affect the generation of industrial, commercial, creative and even personal applications that require more electricity.
For data centers, the electricity demand in the US could rise from the current 5 percent to 14 percent by 2030.
“Data centers are electricity-intensive, and their proliferation is driving massive investments in both direct copper use (for power delivery, cooling, and IT infrastructure) and in the electric grid infrastructure that supports them.”
The report illustrated that to meet the global power demand of 2040, the world will need to build the equivalent of roughly 330 Hoover Dams, or over 650 one-gigawatt nuclear reactors each year between now and then.
“Copper is the material enabling this massive growth in power demand – unlocking the age of AI and the electrified future of which it is characteristic.”
A report by Benchmark on annual EV sales revealed that 20.7 million units were sold in 2025, but that the same growth rate of 20 percent “is not expected” to be the same in 2026.
Noting, “manufacturers (will) focus their efforts on the deadline year, 2027.’
In terms of overall demand for copper and how it relates to EVs, S&P Global said that demand for ICE vehicles declines due to the growing share of EVs.
“Construction and machinery continue to be the largest contributors to core economic demand.”
Australia’s copper developments
As a nation, Australia is making moves that relate to copper in terms of demand and investment.
Its Critical Minerals Strategy and Resource Industry Growth Initiative, along with its partnership with Japan, prioritize joint investment and regulatory simplification.
Using public finance bodies such as the Japan Bank for International Cooperation (JBIC) and JOGMEC, Japan is backing Australian projects to secure long-term access to critical minerals, including copper.
Firms such as Lynas Rare Earths (ASX:LYC,OTCQX:LYSDY) and their projects also play a role, assisting in securing stable supplies of rare earths, lithium and copper.
In 2024 and 2025, cooperation under the Japan–Australia Critical Minerals Partnership expanded further, with new processing and infrastructure initiatives announced in Western Australia.
Large-scale infrastructure projects are also adding to future copper demand. One high-profile example is the proposed AAPowerLink subsea cable project, which would connect Australia to Singapore and Indonesia.
If developed as planned, the project could consume tens of thousands of tonnes of copper, highlighting how Australia’s export-focused energy and infrastructure strategy is translating into material demand growth.
Together, these developments underscore how government-backed partnerships and major infrastructure investments are reinforcing Australia’s role as a reliable copper supplier, while creating longer-term opportunities for investors across the copper value chain.
Addressing the basics
The demand for copper arises from the fact that it is essential for the generation, transmission and use of electricity.
The irony is that the metal which enables electrification is having a hard time catching up to the accelerating pace of electrification itself.
While S&P Global did not have policy recommendations, it implied that current policies may be slowing things down.
“Average copper mine takes 17 years from discovery to production, with much time spent on permitting, environmental reviews and community consultations.”
It cited that changing government terms, tariffs and regulatory frameworks are bringing uncertainty to the resource sector, slowing investment and project development.
The report also noted that while mining is the primary driver of supply, it is only a part of the picture. It’s also about what happens to copper when it leaves mines.
The conclusion is that the requirement is for multilateral cooperation and increased regional diversification.
“The future is not just copper-intensive, it is copper-enabled,” S&P Global concluded.
“As electrification and digital intelligence become defining characteristics of global development, copper is indeed an ever-more critical mineral, carrying the electric currents that are connecting, conducting, and catalyzing innovation and economic advance.”
Securities Disclosure: I, Gabrielle de la Cruz, hold no direct investment interest in any company mentioned in this article.