Copper faces 30% supply deficit by 2035, IEA warns at UK summit

Copper is heading toward a supply shortage that could reach 30% by 2035 making the commodity one of the most vulnerable links in global supply chains supporting energy transition and artificial intelligence development, Shobhan Dhir, International Energy Agency's critical minerals analyst, said at the annual Critical Minerals Association conference on Dec. 1.

Unlike lithium, where new supply is emerging across diverse regions, including Zimbabwe and Argentina, copper faces structural constraints that cannot be easily overcome through rapid capacity additions. The projected copper deficit stems from declining ore grades, rising capital costs, and lengthy project development timelines that make copper particularly difficult to scale up compared to other critical minerals.

"Copper is the one we're really concerned about," Dhir, said. "... So this is a really challenging mineral to ramp up supply quickly. So we are particularly concerned and I want to highlight that as one of the key global issues going forward."

Market concentration

This fragility is exacerbated by China's overwhelming dominance. Of the IEA's expanded list of 20 strategic minerals — spanning energy, defense, aerospace and AI — China is the top refiner for 19 of them. Indonesia is the only exception for nickel, although much of that capacity is controlled by Chinese companies. "This is exceptional concentration like we have not seen before," Dhir warned, noting that export controls proliferated sharply in 2025, tightening an already high-risk environment.

The analyst's concern came despite what he called "really, really great news" — the UK's newly released critical minerals strategy. Policy momentum globally has accelerated, he said, particularly in financing, recycling and even stockpiling. Yet investment trends remain discouraging: mining capex grew only 5% in 2024, while exploration spending was flat as depressed prices — driven not by weak demand but surging supply from China and Indonesia — failed to generate the right signals.

Market concentration is deepening rather than easing. The share of the top three refiners for major energy minerals has climbed from 82% in 2020 to 86% in 2024, with virtually all additional dominance accruing to the largest player. Removing China from supply calculations leaves the rest of the world able to meet only half of its own demand for battery metals and rare earths, Dhir said, underscoring vulnerabilities to shocks ranging from trade restrictions to extreme weather.

Despite promising diversification projects — especially in rare earths — Dhir cautioned that costs for new suppliers remain about 50% higher than those of incumbent producers, requiring coordinated policies, co-investment and new risk-mitigation tools. Without them, he said, the world risks building its clean-energy and AI revolutions on an increasingly unstable foundation.

UK strategy

The UK government outlined ambitious domestic production targets to reduce dependence on concentrated supply chains, with Philippa Makepeace OBE, Director Geopolitics and Economic Security at the Department for Business and Trade, detailing the country's circular economy approach to critical minerals security in her speech at the conference.

"Critical minerals such as rare earths are too precious to be readily disposed of and never seen again, and yet that does happen," Makepeace said. "By strengthening our own capabilities for recycling, mining and refining in the UK, we can create a much more circular economy, support British industry and help diversify both UK and global supply chains."

The UK strategy targets meeting at least 10% of industrial demand for critical minerals through domestic production by 2035, including a minimum 50,000 metric tons of lithium production. An additional 20% of demand would be met through recycling, supported by up to £50 million in targeted funding.

The strategy also places heavy emphasis on international partnerships, with Makepeace highlighting engagement with countries such as Kyrgyzstan, Mongolia and Canada. London is pushing a rule that no more than 60% of any critical mineral should come from a single supplier, a direct response to China's dominance of 70% of rare earth mining and 90% of refining.

Makepeace pointed to the UK's financial infrastructure — notably the London Metals Exchange and deep capital markets — as an advantage in mobilizing investment for projects that struggle with high upfront costs.