Copper: The Backbone of Modern Industry Faces Its Greatest Test

The world is entering a critical juncture for copper. According to S&P Global’s latest comprehensive analysis, the metal is transitioning from a cyclical commodity into a strategic asset that underpins everything from AI infrastructure to renewable energy systems. The stakes couldn’t be higher: global copper demand is projected to surge roughly 50 percent over the next 15 years, climbing from approximately 28 million metric tons in 2025 to 42 million metric tons by 2040. Yet here lies the paradox—the supply side is fundamentally unprepared for this surge. Without aggressive investment in new mining capacity and processing infrastructure, the market could face a devastating shortfall of up to 10 million metric tons by 2040, creating a bottleneck that could constrain the global energy transition itself.

The Perfect Storm: Multiple Drivers Pushing Copper Demand to New Heights

Understanding why copper demand is accelerating requires examining the distinct but overlapping forces reshaping the global economy. These drivers, which S&P Global identifies as four key vectors, paint a picture of copper becoming increasingly essential to modern industrial infrastructure in ways that extend far beyond traditional applications.

Electrification stands at the center of this transformation. Global electricity consumption is expected to grow by nearly 50 percent by 2040, outpacing every other energy source. Copper is indispensable throughout this system—from power generation plants and transmission networks to the final mile of distribution in buildings, vehicles, and factories. What makes the current moment unique is not merely the scale of electrification, but the emergence of powerful new consumption patterns layered atop traditional demand.

Artificial intelligence represents the most visible new force reshaping copper markets. While AI research spans decades, its commercial explosion beginning in late 2022 has triggered what analysts increasingly call an “AI arms race.” This competition centers on massive capital deployment toward data centers, semiconductor fabrication, and supporting power infrastructure. The numbers are staggering: data centers consume enormous quantities of electricity and require copper for wiring, cooling systems, and grid interconnections. S&P Global forecasts that data centers alone could account for as much as 14 percent of total US electricity demand by 2030, nearly triple their current 5 percent share. This expansion cascades through the entire energy system—new facilities demand upgraded transmission lines, additional power generation, and increasingly sophisticated cooling infrastructure, all of which are copper-intensive at every layer.

Traditional economic demand, what market participants often call “Dr. Copper” for its sensitivity to broader economic health, remains surprisingly durable. Construction, machinery, appliances, transportation, and conventional power generation collectively still represent the largest share of global copper use. S&P Global projects this baseline demand will grow at roughly 2 percent annually through 2040, rising from about 18 million metric tons to approximately 23 million metric tons. Much of this growth will emanate from the developing world, where industrialization and rising living standards are driving consumption. One striking example illustrates this trend: the developing world is projected to install nearly two billion new air conditioners by 2040, each requiring copper components. Simultaneously, advanced economies are intensifying their copper demand through manufacturing reshoring initiatives and substantial grid modernization programs.

The energy transition forms the second major pillar of incremental copper consumption. Electric vehicles require nearly three times as much copper as conventional gasoline-powered cars. Solar and wind installations represent another massive consumption driver—over 90 percent of new global electricity generation capacity in 2025 came from these renewable sources, all heavily dependent on copper. Battery storage systems, which are becoming integral to modern electricity grids, add yet another layer of copper demand that continues expanding as renewable integration deepens.

A fourth driver, less discussed but increasingly consequential, is defense. Rising geopolitical tensions and the accelerating electrification of military systems are pushing governments to invest heavily in advanced weapons platforms, surveillance systems, and supporting infrastructure. Defense-related copper demand exhibits unique characteristics: it is relatively inelastic given national security imperatives and tends to remain robust regardless of economic cycles, thereby adding persistent pressure to an already tightening global copper balance.

Where Growth Happens: Geographic Shifts Reshape Copper Markets

The distribution of copper demand growth reveals significant geographic imbalances that will define market dynamics for years to come. China and the broader Asia-Pacific region are positioned to capture approximately 60 percent of incremental copper demand through 2040. This dominance reflects multiple drivers: massive electric vehicle adoption, aggressive renewable energy deployment, extensive grid expansion projects, and continued industrial development across the region.

North America and Europe face their own substantial demand increases, though driven by different dynamics. In these advanced economies, growth will center on AI-driven data center construction, clean energy infrastructure buildout, and the electrification of transportation networks. The Middle East presents another interesting case, with some of the fastest projected copper demand growth rates globally, reflecting ambitious infrastructure modernization and energy investment strategies across the region.

This geographic heterogeneity matters because it highlights where investment capital must flow and which regions will face the most acute supply constraints.

The Supply Side Crisis: Why New Mining Is Crucial

The bullish demand outlook collides directly with a profoundly constrained supply picture. Existing copper mines are aging, ore grades continue declining, and discovering economically viable new deposits has become increasingly difficult and expensive. The development timeline alone presents a formidable barrier: S&P Global notes that bringing a copper mine from discovery to production now requires approximately 17 years on average. Permitting processes, environmental reviews, indigenous community consultations, and regulatory compliance account for the majority of this timeline, creating what amounts to structural delays in supply expansion.

Primary copper supply from mining operations is expected to peak around 2030 and subsequently decline absent major new project development. Recycling offers some relief—secondary copper supply can mitigate some shortfalls—but it cannot be a panacea. Even under optimistic assumptions, recycling is projected to satisfy at most one-quarter to one-third of global copper demand by 2040. This leaves a substantial structural gap that only new mine development or significant expansions of existing operations can fill. The math is stark: without aggressive supply-side action, the market faces a genuine scarcity scenario that could constrain the renewable energy transition and broader electrification objectives.

A Strategic Asset Enters the Mainstream

The implication is clear: copper has transcended its traditional role as a cyclical industrial metal and now functions as a strategic asset inseparable from energy security, technological advancement, and national security considerations. The demand trajectory is accelerating, yet the supply infrastructure remains fundamentally misaligned with future requirements. Mining forms the indispensable foundation of any solution, but geology alone will not determine outcomes.

Resolving this imbalance requires deliberate strategic action: greater geographic diversification of mining operations, substantial new capital deployment, and enhanced multilateral cooperation to develop more resilient and environmentally sustainable copper supply systems. Governments, industry participants, and international institutions must recognize that copper is no longer simply a commodity to be traded on price signals—it is now a critical input into the backbone of modern industry, and ensuring adequate supply will be central to the success of the global energy transition and technological progress for decades to come.