Copper supply gap to widen 24% by 2040 as electrification accelerates: study

Copper supply is expected to fall 10 million metric tons short of demand by 2040, creating a "systemic risk" for global industries as artificial intelligence, defense spending and electrification drive unprecedented consumption of the critical metal, a new study released Jan. 8 by S&P Global Energy and S&P Global Market Intelligence finds.

The shortage would be 23.8% shy of the projected demand of 42 million mt by 2040, even as recycled copper scrap more than doubles to 10 million mt, according to the "Copper in the Age of AI: The Challenges of Electrification" study.

The supply gap threatens to constrain technological advancement and economic growth as copper becomes increasingly essential for AI data centers, electric vehicles, renewable energy infrastructure and defense systems, the report said.

Without significant changes to supply, global copper production is projected to peak at 33 million mt in 2030 before declining, while demand is expected to surge 50% from current levels, driven by accelerating electrification across multiple sectors, according to the study. The widening disconnect highlights copper's dual role as both enabler and potential bottleneck for the energy transition and digital transformation.

Copper prices surged to fresh records at the start of 2026, surpassing $13,000/mt amid mounting supply concerns and investor demand for the industrial metal.

The London Metal Exchange spot copper price hit a record $13,240.98/mt on Jan. 6, while US-traded COMEX copper futures for the first position closed at $13,251.37/mt, but weakened to a $12,806/mt settlement on Jan. 7. The LME copper Grade A cash price had been setting records throughout most of December, reflecting sustained upward pressure on the industrial metal.

"Here, in short, is the quandary: copper is the great enabler of electrification, but the accelerating pace of electrification is an increasing challenge for copper," Daniel Yergin, vice chairman at S&P Global, who co-chaired the study, said in a statement. "Economic demand, grid expansion, renewable generation, AI computation, digital industries, electric vehicles and defense are scaling all at once -- and supply is not on track to keep pace."

The study identifies four key demand vectors driving copper consumption higher. Core economic demand from construction, appliances and traditional industries is expected to reach 23 million mt by 2040, representing 53% of global demand. Energy transition demand from electric vehicles, battery storage and renewable power is projected to increase by more than 7.1 million mt to 15.6 million mt over the same period.

Emerging vectors

Two emerging demand categories pose additional challenges for supply adequacy. AI and data center demand is expected to triple by 2040 as total installed capacity reaches 550 GW, more than five times 2022 levels, according to the study. Defense spending could double to $6 trillion by 2040 amid rising international tensions, with both vectors representing a combined 4 million mt of additional copper demand.

The study also identifies humanoid robots as a potential fifth demand vector -- 1 billion units in operation by 2040 would require about 1.6 million mt of copper annually, equivalent to 6% of current demand.

Supply constraints stem from multiple challenges across the copper value chain. Declining ore grades, rising energy and labor costs, complex extraction conditions and lengthy permitting processes combine to limit new mine development, the report said. The average timeline from discovery to production spans 17 years, while environmental opposition and judicial reviews further delay projects.

"Primary production -- mining -- remains the irreplaceable foundation of copper supply," said Eleonor Kramarz, global head of critical minerals and energy transition consulting at S&P Global Energy. "Bridging the impending supply gap depends not only on geology, engineering, logistics and investment, but also on governance and policies."

Supply chain concentration adds another layer of risk, with six countries responsible for roughly two-thirds of mining production, according to the study. China accounts for approximately 40% of global smelting capacity and 66% of copper concentrate imports, making the global supply vulnerable to policy shocks and trade barriers, the report said.

The study estimates that an additional 10 million mt of primary supply will be required by 2040 beyond increased recycling. However, without significant investment, global primary production could reach just 22 million mt by 2040, 1 million mt below current levels.