Copper Prices Soar as Electrification and AI Fuel Demand
Copper prices have surged in recent years due to increasing demand from various sectors, including electricity networks, electric vehicles, and data centers. According to the International Energy Agency (IEA), copper demand is expected to rise by around 7 million tonnes by 2040.
The IEA notes that copper is crucial for electrification, with widespread use in electric vehicles, renewable-energy infrastructure, and other electrical equipment. Artificial intelligence is also driving up demand, as data centers require significant amounts of electricity and physical infrastructure.
However, supply cannot keep pace with this increasing demand. Many major copper deposits are mature, ore grades are declining, and more rock must be mined to obtain the same amount of copper. This increases production costs, making it less viable for mines to operate.
The IEA estimates that the average grade of copper mined globally has fallen by around 40% since 1991, while only 5% of copper deposits discovered over the past 35 years were found in the last decade. Developing a new mine takes an average of 17 years from discovery to production.
Recent disruptions at major mines such as Cobre Panamá, Grasberg, and Kamoa-Kakula have further tightened the market. The IEA forecasts a 25% copper supply gap in 2035.