Why the world is running out of copper — and how the AI boom is speeding up the crunch

Copper crunch driven by demand

Copper has always been essential to modern industry, but in the mid-2020s it has quietly become one of the world’s most strategically contested resources. Demand is rising sharply from three directions at once — artificial intelligence data centres, the clean-energy transition and a renewed global arms buildup — while supply from the world’s mines is stagnating. The result is a looming copper shortfall that policymakers, mining majors and commodity traders now view as one of the biggest risks to global growth, the Financial Times reported.

Across the United States, Europe and parts of Asia, the race to build out AI capacity has transformed copper into a critical technology metal. Hyperscale data centres require vast quantities of high-grade copper wiring for power delivery and cooling systems. Industry estimates suggest that AI-intensive data centres need more than twice the copper per megawatt than conventional facilities, making each cluster a massive new consumer of the metal. By 2050, global data-centre copper demand is expected to increase several-fold, a projection that has already tightened price expectations.

Why the green transition is copper hungry

AI is only one side of the squeeze. The global shift to renewable energy depends on copper-heavy infrastructure. Solar farms, offshore wind turbines, grid-scale batteries and transmission lines all rely on copper’s conductivity. For many countries, especially the US and Europe, the scale of planned electricity grid upgrades is unprecedented: thousands of kilometres of new lines and substations, each one adding to copper demand at a time when supply is failing to expand.

Defence spending adds a quieter, often unreported, layer to the problem. Copper is integral to missiles, drones, naval vessels, radar systems and armoured vehicles. As countries increase procurement and stockpiles, an invisible but significant share of global copper flows into military supply chains. Analysts believe this share will rise in 2025 and beyond, but the quantities remain classified, further complicating market forecasts.

Ageing mines and a thin pipeline of new projects

While demand rises across sectors, mine production tells a different story. Many of the world’s major copper mines — from Chile to Indonesia to the American Southwest — are more than half a century old. Ore grades are declining, operational disruptions are more common, and new discoveries are increasingly rare. Industry data shows that very few large deposits have been found in the past decade, and even fewer are ready for development.

This supply stagnation is why mining companies are racing to extend the life of existing pits, reopen shuttered sites and consolidate through large mergers. But even these efforts face obstacles. In most regions, new mines must navigate environmental resistance, water scarcity, complex permitting and local political opposition. In the US, one of the few major new copper projects has faced years of delays because the ore lies beneath land considered sacred by parts of the Apache community. Similar tensions are visible in Chile, Peru and Serbia, where communities have pushed back against mining expansion despite the economic benefits.

Geopolitics, China and control of the copper chain

Geopolitics adds another layer of vulnerability. China dominates global copper smelting capacity and remains the largest consumer, shaping the market through its power grid investments and industrial cycles. Western governments now see copper as a strategic input, similar to rare earths, and the US has added it to its list of critical minerals to reduce dependence on Chinese processing. But building new smelters or alternative supply chains will take years and require substantial capital.

Prices have already responded to the tightening gap. Copper has climbed past $11,000 a tonne, hitting repeated highs since late 2025. Market analysts warn that by early 2030, the world could enter a structural deficit that pushes prices significantly higher — with ripple effects on renewable energy costs, electric vehicles, military spending and the pace of the AI rollout.

Why this copper crunch may not self-correct quickly

Unlike past commodities cycles, this one may not correct quickly. Traditional substitution is limited — aluminium can replace copper in some cases, but performance losses are significant. Recycling will help, but recycled copper cannot fill the scale of new demand created by digital infrastructure and electrification.

The bottom line is clear: the world’s copper needs are rising faster than the world’s copper mines can respond. Unless the industry can unlock new deposits, accelerate approvals or dramatically scale recycling and efficiency, the AI boom, the green transition and defence modernisation will all run into the same bottleneck — a shortage of the metal that powers them.