Miningweb: Will soaring Copper demand be the obstacle to our digital future?

Key topics:AI, EVs and defence fuel surging copper demand.Supply gaps loom as mining investment badly lags.China advances while Western miners avoid risk.Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here..By Kerry Lanaghan.Copper, the fundamental element essential for a low-carbon, digital future, has become a linchpin of global economic activity. It is irreplaceable in defence systems, electric vehicles (EVs), renewable energy infrastructure, and, increasingly, artificial intelligence (AI) data centres. However, a new report from Wood Mackenzie warns that while the global appetite for copper is voracious, the mining industry is failing to deliver the necessary supply, setting the stage for a critical and deepening supply imbalance over the next decade.Under Wood Mackenzie’s base case scenario, total copper demand is projected to surge 24% to 42.7 million tonnes per annum (Mtpa) by 2035, driven primarily by electrification and global economic development. This growth is being accelerated by four powerful disruptors: the energy transition (EVs, renewables, grid infrastructure), the AI-driven electricity demand explosion from data centres, Europe’s significant €800 billion military buildup, and rapid industrialisation across India and Southeast Asia. By 2035, these four factors alone are expected to account for a combined 40% of demand growth. Furthermore, high-risk upside cases - such as an acceleration toward net-zero targets or faster economic development in Asia - could add substantial additional demand, potentially making the looming supply shortfall even more acute. For instance, by 2035, EVs alone are forecast to require 4.3 Mtpa of copper, corresponding to 10% annual growth over the decade.The challenge facing the copper market is immense. To meet the impending supply gap over the next decade, the market requires an estimated 8 Mtpa of new capacity from greenfield and brownfield projects, plus an additional 3.5 Mtpa from direct scrap use. This necessitates bringing an unprecedented rate of new mines online - averaging 880 kilotonnes per annum (ktpa) every year - at a total estimated cost exceeding US$210 billion.Alarm bells are ringing over the slow pace of development. Western mining companies have largely been fixated on capital discipline and achieving scale through mergers and acquisitions (M&A) rather than investing organically in new mines. They favour the regulatory stability of OECD jurisdictions, constrained by stringent environmental, social, and governance (ESG) pressures and investor risk aversion. Western miners face demanding financing terms, including stress tests at copper prices 20-30% below forecasts, which discourages investment in politically volatile, resource-rich regions.This constraint has opened a significant geopolitical fault line. While Western firms retreat from higher-risk regions, risk-tolerant Chinese state-owned enterprises (SOEs) are pushing ahead in Africa and Central Asia. These SOEs, such as China Molybdenum, benefit from low-cost, long-term loans from policy banks and operate under national mandates, allowing them to accept higher political risk and quickly cement control over future copper supply chains.Compounding the investment challenge are escalating physical supply risks, including the increasing technical and cost hurdles of moving toward deeper underground mining. Furthermore, climate change, manifesting through volatile weather patterns like El Niño, is causing periodic flooding and disruptions. Wood Mackenzie suggests that due to these escalating risks, the industry may need to raise its baseline assumption for annual mine supply disruptions from 5% to 6%, further tightening the market and pushing up copper prices. To incentivise the necessary scale of investment from a Western perspective, project incentive prices might need to exceed US$11,000 per tonne (US$5/lb).Copper is fundamentally the backbone of the global energy and digital transition, but it is fast becoming a strategic bottleneck. To secure the critical mineral supply chains of tomorrow, the West must overcome its risk aversion. Governments and industry leaders need to cease relying solely on market forces and instead utilise concerted strategies, such as pooling resources, backing high-risk projects, and establishing public-private consortia that can move decisively to fund crucial developments.The full report from Wood Mackenzie can be read here.

Miningweb: Will soaring Copper demand be the obstacle to our digital future?

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