The Copper Crunch: A Silent Crisis Threatening Our AI and Green Future

WASHINGTON, D.C. – January 08, 2026 – A stark warning has been issued: the world is hurtling toward a colossal copper deficit that threatens to undermine global economic growth, stall technological progress, and derail climate goals. A comprehensive new study by S&P Global, titled "Copper in the Age of AI," projects a staggering supply shortfall of 10 million metric tons by 2040—a gap equivalent to 25% of projected demand. This looming scarcity, described as a "systemic risk," is being driven by an unprecedented convergence of demand from the energy transition, booming artificial intelligence infrastructure, and rising defense spending, creating a bottleneck for the very metal that enables our modern world.

Anatomy of a Supercharged Demand

The impending copper crunch is not the result of a single factor, but a perfect storm of accelerating demand across multiple fronts. Global demand is projected to surge by 50%, reaching 42 million metric tons by 2040. While core economic drivers like construction and appliance manufacturing remain the largest component, the most explosive growth comes from electrification and new, data-hungry technologies.

The global push for clean energy is fundamentally copper-intensive. An electric vehicle, for instance, requires roughly 83 kilograms of copper, nearly four times the amount used in a traditional internal combustion engine car. Wind turbines consume about three metric tons of copper for every megawatt of power. The International Energy Agency (IEA) has separately estimated that clean energy technologies alone will demand 11.5 million tons of copper annually by 2040. This creates a profound "green paradox": the transition away from fossil fuels is critically dependent on a mineral whose supply is becoming dangerously constrained.

Adding potent new fuel to the fire are the twin engines of artificial intelligence and defense. The race for AI supremacy has triggered a massive build-out of data centers, which are voracious consumers of electricity and, by extension, copper. S&P Global projects that the installed capacity of data centers will quintuple by 2040, with some analysts forecasting they could account for as much as 14% of total U.S. electricity demand by 2030. At the same time, escalating geopolitical tensions and the modernization of military hardware are expected to triple copper demand from the defense sector, a demand considered highly inelastic to price changes.

"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," said Daniel Yergin, Vice Chairman, S&P Global, in the report's release. "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 Supply-Side Squeeze: A Mining Bottleneck

While demand skyrockets, the supply side is struggling to keep up, facing a cascade of geological, economic, and regulatory hurdles. The S&P Global study projects that without significant intervention, global primary copper production from mines will not only fail to grow but could actually decline from today's levels by 2040.

The fundamental challenge is the immense difficulty and time required to bring new supply online. On average, it takes a staggering 17 years for a new copper mine to move from discovery to first production, with some estimates putting the timeline closer to 23 years. In the United States, the process can be even more protracted, sometimes spanning nearly three decades due to lengthy permitting and judicial reviews. This glacial pace is fundamentally misaligned with the speed of the energy transition and technological change.

Miners are also contending with declining ore grades, meaning more rock must be processed to extract the same amount of copper, driving up costs and energy consumption. This is compounded by rising expenses for labor and increasingly complex extraction conditions. Even with a projected doubling of recycled copper scrap to 10 million metric tons by 2040, it will not be enough to bridge the cavernous supply-demand gap.

The fate of major projects like the Resolution Copper mine in Arizona, a joint venture between Rio Tinto and BHP, exemplifies the problem. Poised to supply up to 25% of U.S. copper demand, the project has been stalled for decades in a complex web of environmental opposition and regulatory delays, a stark illustration of the above-ground risks that can immobilize billions in investment and vast reserves of critical metal.

Copper Becomes a Geopolitical Flashpoint

The looming deficit is rapidly transforming copper from a simple industrial commodity into a strategic asset at the center of a new geopolitical contest. The high concentration of the copper supply chain presents a significant vulnerability. Just six countries are responsible for two-thirds of global mining output, while processing is even more centralized. China alone commands roughly 40% of global smelting capacity and is the destination for two-thirds of all mined copper concentrate imports, giving it immense leverage over the global supply.

This concentration makes the entire system fragile, susceptible to policy shocks, trade disruptions, and resource nationalism. Recognizing this vulnerability, governments are scrambling to secure their access. In a significant policy shift that began with an executive order in February 2025, the United States has now officially designated copper a "critical material." This classification, confirmed by both the Department of Energy and the U.S. Geological Survey, unlocks federal subsidies under the Inflation Reduction Act and paves the way for streamlined permitting for new domestic mining projects.

The European Union has taken similar action with its Critical Raw Materials Act, which came into force in 2024. The act sets ambitious targets for domestic mining (10%), processing (40%), and recycling (25%) of strategic materials like copper by 2030, explicitly aiming to reduce its dependence on any single non-EU country. These policies signal a global awakening to the reality that future economic prosperity and national security are inextricably linked to a reliable supply of copper.

The Race for Alternatives and an Unavoidable Reality

The threat of a copper-constrained future has intensified the search for alternatives. For decades, aluminum has served as the primary substitute in applications like long-distance power lines, valued for its lower weight and cost. However, it is less conductive and more brittle than copper, limiting its utility. In communications, fiber optic cables have largely replaced copper for high-speed data transmission.

More advanced materials are also on the horizon. Carbon-based conductors like Galvorn and carbon nanotubes boast conductivity comparable to copper at a fraction of the weight, but they remain far from being cost-effective, scalable replacements. While these innovations offer glimpses of a potential post-copper future, they cannot solve the immediate problem.

The sheer volume of copper required to build out the world's EV fleets, renewable energy grids, and AI infrastructure is immense. Substitution alone is unlikely to close a 10 million metric ton gap. The unavoidable reality, as underscored by the S&P Global study, is that bridging the shortfall will depend on a massive and rapid expansion of primary mining production. Achieving this will require not just unprecedented investment, but a fundamental rethinking of regulatory policies to balance environmental stewardship with the urgent need to unlock the metal that will power the future.