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Mining company BHP warned that the event of artificial intelligence would exacerbate the looming shortage of copper, a metal essential for the energy transition.
The rise of knowledge centers and artificial intelligence, which requires more energy-intensive computing, could increase global copper demand by 3.4 million tonnes a yr by 2050, BHP Chief Financial Officer Vandita Pant told the Financial Times.
“Today, data centers account for lower than one percent of copper demand, but by 2050, that's expected to be six to seven percent,” she said. “There's a variety of copper in data centers.”
BHP, the world's largest mining company by market capitalization, expects global copper demand to rise from 30.4 million tonnes in 2021 to 52.5 million tonnes per yr by 2050 – a rise of 72 percent.
AI is changing energy systems and the demand for raw materials worldwide.
Expectations of a copper shortage have sparked a race for access to the mines, including BHP's unsuccessful £39 billion takeover bid for London-listed Anglo American earlier this yr.
In July, BHP and Canadian company Lundin Mining paid $3 billion to amass exploration company Filo, whose assets include copper deposits.
Copper is utilized in a spread of industries and products needed to realize net zero targets, including power cables, electric vehicles and solar farms. Many analysts expect a worldwide copper shortage within the medium to long run.
This shortage is predicted to worsen with the shift to AI applications in data centers, as they use increasingly power-intensive chips and increase energy requirements.
“Data centers themselves are increasingly using less copper, but their power supplies are copper-intensive,” says Colin Hamilton, commodity analyst at BMO Capital Markets.
Copper is used not only to power data centers, but additionally within the cooling systems and to attach the processors in the middle.
Others indicate that the long-term forecasts for copper in data centers are highly uncertain.
“We're attempting to predict the long run of a market that we don't really know much about,” said one analyst. “We're at first of AI. So how much AI will the world be using in 2050? We don’t know.”
Weak demand in China has weighed on copper prices this yr. They currently stand at around $9,207 per tonne, 15 per cent below their peak in May.
Due to weak demand, the copper market is in oversupply this yr, and BHP forecasts that it will proceed into next yr before reversing towards the tip of this decade.
The company warned in August that rising demand for copper could lead on to a “fly-up” pricing system “within the last third of the 2020s” as demand exceeds supply.
