Despite the current weak demand in the global copper market, mining giant BHP Billiton still warns that copper demand will soar rapidly in a few years, leading to a surge in copper prices as well.
BHP believes that with the development of artificial intelligence, copper demand will also soar in the future. They pointed out that copper is a key metal for the transition to clean energy, and the development of artificial intelligence will exacerbate the copper shortage problem.
The AI wave will drive a surge in copper demand
According to Vandita Pant, Chief Financial Officer of BHP Billiton, the rise of data centers and artificial intelligence could increase global copper demand by 3.4 million tons annually by 2050, as this technological development requires more energy intensive computing.
She said, "Currently, data centers account for less than 1% of copper demand, but by 2050, this proportion is expected to reach 6% to 7%
By market value, BHP Billiton is the world's largest mining company. The company expects that global copper demand will increase from 30.4 million tons in 2021 to 52.5 million tons per year by 2050, a growth rate of 72%.
At present, the global copper market is still in a weak stage of oversupply. According to BHP's forecast, due to sluggish demand, the oversupply situation in the copper market this year will continue next year and will not reverse until the end of this decade (around 2030).
The company warned in August this year that "in the last third of the 2020s (approximately 2027-2030)", global demand for copper would continue to rise, potentially leading to demand exceeding supply and causing prices to "skyrocket".
Currently, artificial intelligence is reshaping energy systems and demand for commodities around the world. Due to market expectations of a possible shortage of copper supply, various parties are competing to acquire copper mines, including BHP Billiton's plan earlier this year to acquire London listed company Anglo American for £ 39 billion, but the deal was unsuccessful.
In July of this year, BHP Billiton and Lundin Mining of Canada spent $3 billion to acquire exploration company Filo, whose assets include copper exploration areas.
Copper is widely used in the transition to clean energy
Copper is used in a range of industries and products required to achieve net zero emissions targets, including power cables, electric vehicles, and solar farms. Many analysts predict that there will be a shortage of global copper supply in the medium to long term.
In the wave of artificial intelligence, a large number of data centers are expected to exacerbate this shortage as AI applications use more energy intensive chips, increasing energy demand.
Although the copper intensity required for data centers themselves is gradually decreasing, the industries that power them are still copper intensive, "said Colin Hamilton, commodity analyst at BMO Capital Markets
Copper is not only used to power data centers, but also for cooling systems and connecting processors in the center.
However, some business people on Wall Street have warned that there is a high degree of uncertainty in the long-term forecast of copper usage in data centers.
An analyst said, "We are trying to predict the future of a market that we don't fully understand... We are at the dawn of artificial intelligence, so how much artificial intelligence will the world use by 2050? We don't know either