A single thread of copper runs through the modern world: it powers our grids, wires our data centres, and sits at the heart of electric vehicles. Now, credit ratings firm S&P is warning that surging demand — driven in large part by artificial intelligence and higher defense spending — could create a copper shortage so acute it becomes a systemic risk to the global economy.
Demand curves getting steeper
Analysts point to a convergence of forces. AI training clusters and hyperscale data centres gobble electricity and copper wiring; defense programmes are restocking strategic inventories and buying more high-spec components that use the metal; meanwhile global electrification — from EVs to renewable grids — continues apace. Reuters reported S&P’s projection that AI alone could boost copper demand by roughly 50% by 2040, a tectonic shift for a market that already struggles with long project lead times.
Markets have noticed. Junior-miner heavy ETFs exploded in 2025, with one equal-weight copper fund posting a 109% gain last year as traders chased scarce supply and rising prices. Banks and commodity houses are now pricing in higher ranges for the near term — one major bank’s 2026 forecast put copper near $12,000 per metric ton — a figure that would make miners and investors sit up.
Why supply can’t catch up quickly
Mining is slow. New large-scale copper projects take a decade or more from discovery to production: exploration, feasibility studies, permitting, financing, construction. Even when deposits are known, ore grades are declining and the easiest projects are already mined. S&P and other analysts underscore that simply throwing capital at the problem won’t solve it overnight.
Recycling helps but can’t fill the gap immediately. Scrap flows and urban-mining programmes will grow, yet they mostly supply refined copper and are constrained by collection rates and the lifespan of existing copper-using equipment. Tightened environmental rules and community opposition to mines also lengthen permitting timelines and raise costs.
Geopolitics complicates the picture. Strategic stockpiling tied to defense budgets can tighten near-term physical availability. And major copper-producing countries face political risks and infrastructure bottlenecks that can disrupt exports — amplifying shortfalls during periods of peak demand.
The industrial dominoes: from data centres to cars
Every hyperscale data centre has miles of copper in power distribution, cooling systems and server racks. That demand profile is changing: firms are now discussing denser compute clusters, sometimes in exotic locations such as proposed orbital facilities, adding a new vector of consumption. (See background on ambitions like Google’s Project Suncatcher for how data-centre plans are evolving.)
AI model builders, including those rolling out their own in-house systems, keep scaling compute and energy needs — a dynamic captured by industry moves such as Microsoft’s recent model releases that increase demand for high-density compute infrastructure and the wiring that supports it Microsoft’s MAI-Image-1.
At the same time EV manufacturers, utilities upgrading grids to handle renewables, and heavy industries converting to electrified processes all add to a demand profile that’s broader and stickier than previous commodity cycles.
What governments, companies and investors might do
Policymakers could ease the squeeze by streamlining permitting for critical mineral projects, incentivising recycling and supporting strategic stockpiles — but those solutions take time and political capital. Companies can respond by securing long-term offtake deals, investing in recycling and supply-chain transparency, or accelerating substitution research (though viable alternatives to copper are limited for many applications).
For investors, the scramble for assets has already shifted capital toward juniors and development-stage miners; that’s reflected in the recent surge in smaller copper-mining ETFs. But the sector carries execution risk: many projects will require sustained financing across interest-rate cycles and face operational hurdles.
What this means for everyday life
In the short run, consumers may see higher costs trickle into electronics, vehicles and power infrastructure projects as manufacturers pass through part of the commodity price shock. For policymakers, the stakes are higher: constrained copper availability could slow electrification and the clean-energy build-out that many countries depend on to meet climate goals.
The market’s reaction — spectacular gains in some copper-focused funds and nervousness across commodities desks — suggests investors are pricing in a prolonged period of tightness. Whether that tightness becomes a systemic risk depends on how quickly supply-side constraints are addressed and how governments and industry coordinate responses.
There’s no single silver bullet. Expanding mine capacity, boosting recycling, and smarter demand management will all be necessary. The world has seen resource crunches before; this time, the pressure point happens to be a metal at the core of both our green ambitions and the digital revolution.