Standard & Poor's global warning: AI competition and defense spending are accelerating simultaneously, global copper resources may face a shortage of millions of tons.

According to a recent study by S&P Global, AI competitions and surging defense spending will exacerbate the expected copper shortage, as producers struggle to expand capacity. In a report supported by mining, S&P Global wrote on Thursday that demand growth is accelerating, while mining supply is facing structural constraints, increasing the risk of copper becoming an economic growth bottleneck. On the London Metal Exchange, due to a series of mine closures and traders hoarding metal in the US ahead of possible tariffs by the Trump administration, copper prices have soared to historic highs above $13,000 per ton. While copper flowing into US warehouses has pushed prices beyond levels supported by basic consumption, new demand sectors indicate that the market will become even tighter in the long term. "Three years ago, AI and data centers weren't even considered," said Aurian De La Noue, Head of S&P Global Energy Transition and Critical Metals Consulting, in an interview. "This study indicates that the world is already moving towards a supply deficit even before considering these new growth vectors." Record-breaking rise in copper prices S&P Global forecasts that global copper demand will increase by 50% to 42 million tons by 2040. While traditional sources such as construction, appliances, transportation, and power generation continue to account for the majority of copper demand, the largest growth share comes from energy transition purposes, including electric vehicles, renewable energy, batteries, and grid expansion. New sources of demand are also expanding. With global installed data center capacity expected to quadruple by 2040, copper consumption related to data centers and AI infrastructure is projected to surge. The study found that by 2040, demand from AI, data centers, and global defense spending could triple, adding 4 million tons of consumption. S&P Global also identified another potential source of demand: humanoid robots. The research shows that while the technology is still in its early stages, if 1 billion humanoid robots are operational by 2040, approximately 1.6 million tons of copper will be needed annually, accounting for about 6% of current consumption. However, due to declining ore quality in existing mines and obstacles in permitting, financing, and construction of new projects, global copper production is expected to peak at around 33 million tons by 2030. The study found that even with a significant increase in recycled copper (expected to double to over 10 million tons during the same period), a shortfall of 10 million tons will remain. It is certain that this supply deficit is largely hypothetical, as consumption is dependent on supply. As prices rise, copper may be replaced in certain products, and supply expansion projects may become more profitable. Estimates of supply-demand balance without new mining S&P wrote that challenges in supply have become more complex due to long development cycles, rising costs, and highly centralized supply chains, making the market increasingly fragile in the face of accelerating demand. High prices are a boon for the industry. But co-chairman of the study, S&P Global Vice Chairman Daniel Yergin, said, "We cannot say for certain that this proves prices are now on a stable, higher plane." "We hesitate to assert that this demonstrates that prices are now at a stable, higher level," Yergin said in an interview. This study received funding from mining giants BHP Group, Rio Tinto Group, as well as traders such as Trafigura, Gunvor, and even Google.