Copper Demand Set to Surpass Supply by 2040
According to S&P Global’s recent report, Copper in the Age of AI: The Challenges of Electrification, copper demand is projected to surge by 50 percent by 2040, reaching 42 million tonnes as the global push for electrification accelerates. This significant increase in demand is primarily driven by the growing need for electricity in various industries, including technology and transportation.
The report highlights that supply, however, is expected to fall short, creating a 10 million tonne deficit, roughly 25 percent below demand, even as production peaks at 33 million tonnes in 2030. This looming shortfall signals major opportunities for investors, but experts caution that production must ramp up now to avoid a deepening supply gap later. Eleonor Kramarz, Global Head of Critical Minerals and Energy Transition Consulting at S&P Global Energy, emphasizes the importance of primary production, stating that “primary production—mining—remains the irreplaceable foundation of copper supply.”
Meeting Demand through Supply
Kramarz notes that bridging the impending supply gap depends not only on geology, engineering, and logistics and investment but also on governance and policies. The report adds that output from existing mines will keep declining without significant new investment, and recycling, regarded as the “secondary supply,” provides at best only about a third of the total supply by 2040. Smelting and refining capacity is still concentrated in China, accounting for about 40 to 50 percent total capacity, which amplifies systemic risks and exposes the supply chain to geopolitical shocks.
The report concludes that while recycling could possibly meet up to a quarter of total demand by 2040, it cannot close the gap – primary mined supply remains essential. As the world transitions to a more electrified future, the demand for copper will continue to grow, driven by the increasing need for electricity in various industries. S&P Global notes that copper plays a huge role in meeting the growing requirements of electrification and technologies such as AI and data centers.
Copper and Electrification
The report highlights that copper is essential for the generation, transmission, and use of electricity, and its demand arises from this fact. The irony is that the metal which enables electrification is having a hard time catching up to the accelerating pace of electrification itself. S&P Global wrote that copper also plays a huge role in meeting the growing requirements of electrification and technologies such as AI and data centers, noting that while AI is not creating the largest of copper demand, its requirements highlight the need for expanded electricity supply.
The report illustrated that to meet the global power demand of 2040, the world will need to build the equivalent of roughly 330 Hoover Dams, or over 650 one-gigawatt nuclear reactors each year between now and then. Copper is the material enabling this massive growth in power demand – unlocking the age of AI and the electrified future of which it is characteristic. A report by Benchmark on annual EV sales revealed that 20.7 million units were sold in 2025, but that the same growth rate of 20 percent “is not expected” to be the same in 2026.
Australia’s Copper Developments
Australia is making moves that relate to copper in terms of demand and investment, with its Critical Minerals Strategy and Resource Industry Growth Initiative, along with its partnership with Japan, prioritizing joint investment and regulatory simplification. Firms such as Lynas Rare Earths and their projects also play a role, assisting in securing stable supplies of rare earths, lithium, and copper. Large-scale infrastructure projects are also adding to future copper demand, with the proposed AAPowerLink subsea cable project being a high-profile example.
If developed as planned, the project could consume tens of thousands of tonnes of copper, highlighting how Australia’s export-focused energy and infrastructure strategy is translating into material demand growth. Together, these developments underscore how government-backed partnerships and major infrastructure investments are reinforcing Australia’s role as a reliable copper supplier, while creating longer-term opportunities for investors across the copper value chain.
Addressing the Basics
The demand for copper arises from the fact that it is essential for the generation, transmission, and use of electricity. The irony is that the metal which enables electrification is having a hard time catching up to the accelerating pace of electrification itself. While S&P Global did not have policy recommendations, it implied that current policies may be slowing things down, noting that an average copper mine takes 17 years from discovery to production, with much time spent on permitting, environmental reviews, and community consultations.
Changing government terms, tariffs, and regulatory frameworks are bringing uncertainty to the resource sector, slowing investment and project development. The report also noted that while mining is the primary driver of supply, it is only a part of the picture, emphasizing the need for multilateral cooperation and increased regional diversification. The conclusion is that the requirement is for a more efficient and effective approach to meeting the growing demand for copper.
Smart Tip for Readers
As the demand for copper continues to grow, it’s essential for individuals and businesses to stay informed about the latest developments in the copper industry and consider the potential implications for their investments and operations. For more information on copper demand and supply, visit Here
