Critical Minerals Supply Chain Strain Threatens AI Data Centers

Critical minerals such as copper and lithium are in high demand for AI data centers, but their supply chain is facing strain due to declining ore grades, geopolitical tensions, and limited refining capacity.

Copper, which accounts for about 50% of the US' needs and is used extensively in data center infrastructure, faces a projected shortfall of 10 million metric tons by 2040 if expansion does not occur.

Data centers have become one of the more visible sources of rising copper demand, with Brendan Smith, co-founder and CEO of SiTration, stating that it takes about 50,000 tons of copper to build a new hyperscale data center.

Shashank Sriram, Senior Research Analyst at Wood Mackenzie, notes that while AI isn't creating the physical deficit on its own, its bottomless willingness to pay is pricing everyone else out of a structurally disrupted market.