BHP warns AI rise will worsen copper shortage

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The rise of artificial intelligence will exacerbate shortages of copper, a metal vital to the clean energy transition, miner BHP has warned.

The growth of data centers and artificial intelligence, which require more energy-intensive computing, could increase global copper demand by 3.4 million tonnes a year by 2050, BHP chief financial officer Vandita Pant told Financial Times.

“Today, data centers account for less than 1 percent of copper demand, but that’s expected to be 6 to 7 percent by 2050,” she said. “There’s a lot of copper in data centers.”

BHP, the world’s largest miner by market capitalization, expects global copper demand to grow to 52.5 million tonnes a year by 2050 from 30.4 million tonnes in 2021 – an increase of 72 %.

AI is reshaping energy systems as well as commodity demand around the world.

Expectations of a copper shortage have sparked a race to secure access to the mines, including BHP’s failed £39bn bid for London-listed Anglo American earlier this year.

In July, BHP, along with Canada’s Lundin Mining, paid $3 billion to acquire exploration company Filo, whose assets include copper prospects.

Copper is used in a wide range of industries and products needed to meet net zero goals, including power cables, electric vehicles and solar farms. Many analysts expect a global copper shortage in the medium to long term.

Data centers are expected to exacerbate this shortage as they shift to accommodate AI applications, which use larger power-hungry chips and increase power needs.

“The data centers themselves are becoming less copper-intensive, but the transmission of electricity to them, which is copper-intensive,” said Colin Hamilton, commodity analyst at BMO Capital Markets.

Copper is used not only to provide power to data centers, but also in cooling systems and to connect the processors in the center.

However, others caution that the long-term outlook for copper in data centers is highly uncertain.

“We’re trying to predict the future of a market we don’t know much about,” said one analyst. “We’re at the dawn of AI, so how much AI will the world use in 2050? We have no idea.”

Weak demand from China has weighed on copper prices this year, which are trading at around $9,207 a tonne, down 15% from their peak in May.

The copper market is in surplus this year due to weak demand, and that will continue next year, BHP forecasts, before reversing towards the end of this decade.

The company warned in August that rising copper demand “in the last third of the 2020s” could lead to an “upward” price regime as demand outstrips supply.