A looming copper shortage is threatening to derail Big Tech’s ambitious plans for artificial intelligence (AI). Mining giant BHP Group, a major copper producer, predicts that the growing need for data centers and AI will drive a significant increase in global copper demand, potentially reaching 52.5 million tonnes annually by 2050. This represents a whopping 72% increase from 2021 levels.
The surge in demand is driven by the insatiable hunger for AI processing power, with companies like Microsoft, Google, and Amazon leading the charge. BHP’s CFO, Vandita Pant, highlighted that the AI boom could create a 3.4 million tonne annual copper deficit by 2050.
Copper plays a crucial role in the transition towards a zero-emission future, finding its way into essential components like power cables, electric vehicles, and solar farms. A potential crisis in copper supply could hinder the progress of major players, including Tesla and Nvidia, which rely on the metal for their operations.
Analysts like JPMorgan’s Patrick Jones are also predicting a copper shortfall, estimating a deficit of four million metric tonnes by 2030 due to the combined pressure from electric vehicles and renewable energy demand. The analyst also points to China’s weakened demand as a contributing factor, as the country accounts for over 50% of global copper consumption.
While BHP Group’s copper production has been steadily increasing, reaching 1.9 million tons in fiscal 2024, it remains unclear whether the company can meet the escalating demands. To address the impending shortage, BHP has invested in projects in Argentina, including the Filo del Sol and Josemaria copper mines, which have the potential to significantly bolster global copper supply.
The company anticipates a further 4% increase in production in fiscal 2025, aiming for an output range of 1.85 to 2.05 million tons. However, investors are wary of the potential impact of the copper shortage on BHP’s stock, which has declined by nearly 14% in the past year. Investors interested in gaining exposure to the company can explore options like the Avantis International Equity ETF (AVDTHE) and Dimensional International Core Equity Market ETF (DFAI).
