Copper in the Age of AI:

Challenges of Electrification

Report by S&P Global Energy & Market Intelligence

Global Copper Demand Outlook

Copper has long been fundamental to electrification and remains an essential material for modern infrastructure. S&P Global's study examines the outlook for copper supply and demand through 2040, focusing on electrification, digitalization, artificial intelligence, data centers, electric vehicles, renewable energy, and defense.

Global copper demand is projected to increase from approximately 28 million metric tons in 2025 to 42 million metric tons by 2040, representing a 50% increase. Without significant expansion of supply, the market could face a potential 10 million metric ton shortfall by 2040.

Electrification Drives Long-Term Demand

The report identifies electricity demand as one of the fundamental drivers of future copper consumption. S&P Global projects that global electricity demand could increase by nearly 50% by 2040, with growth expected across major markets including the United States, China, and India.

Copper is widely used throughout electricity generation, transmission, distribution, and end-use equipment. As economies continue to electrify, the expansion of power infrastructure is expected to create additional demand for copper across multiple sectors.

AI and Data Centers Create a New Demand Vector

Artificial intelligence and data centers are emerging as a new source of copper demand. The rapid expansion of AI requires large amounts of electricity, while data centers require copper for power delivery, cooling, IT infrastructure, and the electrical networks supporting their operations.

According to the study, data centers could account for approximately 14% of U.S. electricity demand by 2030, compared with around 5% today. The expansion of AI applications could also generate additional investment in electricity infrastructure, creating further indirect demand for copper.

Energy Transition Expands Copper Consumption

Energy transition is another major driver of copper demand. Electric vehicles require approximately 2.9 times more copper than conventional vehicles, while solar and wind power projects also require significant quantities of copper.

The report notes that more than 90% of newly installed global electricity generation capacity in 2025 came from solar and wind, while battery storage and the expansion of transmission and distribution networks are creating additional requirements for copper.

Asia Expected to Lead Incremental Demand

Asia is expected to account for approximately 60% of incremental global copper demand through 2040. China and the broader Asia-Pacific region are identified as major sources of future demand growth, while North America and Europe are also expected to see increased consumption associated with digitalization and clean-energy investment.

Copper Supply Faces Structural Challenges

On the supply side, the copper industry faces declining ore grades, increasing production costs, more complex mining conditions, and long development timelines for new projects. S&P Global estimates that the average copper mine takes approximately 17 years from discovery to production, with permitting and other above-ground factors contributing to lengthy development periods.

Without new mine development or expansion of existing assets, primary mined copper supply could increase from approximately 23 million metric tons in 2025 to 27 million metric tons around 2030, before declining to approximately 22 million metric tons by 2040.

Recycling Cannot Fully Close the Gap

Copper recycling provides an important source of secondary supply, but the report indicates that recycling alone will not be sufficient to meet future demand. Even under significant improvements in collection and processing, primary mined copper will remain an essential component of global supply.

The report's key findings indicate that recycling could potentially meet up to around one-quarter of total copper demand by 2040, but this would still leave a substantial requirement for primary supply.

Processing Capacity and Supply Chain Concentration

Copper processing is another important factor in global supply security. S&P Global highlights the concentration of global smelting and refining capacity, particularly in China. China currently accounts for approximately 12 million metric tons of the world's 29 million metric tons of smelting capacity, and this concentration is expected to increase.

The report also notes that treatment and refining charges have fallen to historically low levels, putting pressure on the economics of copper processing and potentially affecting the viability of less competitive smelters.

Copper and the Future of Electrification

Copper's combination of electrical conductivity, durability, and recyclability makes it difficult to substitute across many applications. Although aluminum, plastics, and fiber optics can replace copper in selected applications, technical and economic limitations constrain the potential for widespread substitution.

S&P Global concludes that copper's role in electrification, digitalization, and security will remain significant in the coming decades. The combination of accelerating demand, constrained supply, and concentrated processing capacity presents challenges across the global copper value chain.

Source: S&P Global, Copper in the Age of AI: Challenges of Electrification, January 8, 2026. ©2026 S&P Global.

Key Reference Data: Global copper demand: 28 Mt in 2025 → 42 Mt in 2040; potential supply shortfall: 10 Mt by 2040; global electricity demand: nearly +50% by 2040; Asia: approximately 60% of incremental copper demand.