BloombergNEF projects that the copper market will face a prolonged shortage starting in 2028, with the supply gap reaching 8% of demand by 2035 and expanding to 44% by 2050. The green energy transition and AI‑related infrastructure are driving robust demand, while long mining development cycles—often spanning 15 years—declining ore grades, and insufficient investment are constraining supply. This looming copper deficit could not only underpin sustained price increases but also elevate the costs of the energy transition.
The global copper market is confronting an increasingly severe structural supply‑demand imbalance. The green energy transition, the expansion of AI infrastructure, and infrastructure development in emerging markets are all driving demand, while lengthy mining development cycles, declining ore grades, and insufficient investment are making it difficult for supply to keep pace. A copper shortage could not only fuel sustained price increases but also raise the costs of the energy transition, thereby constraining the growth of related industries.
According to a report released this week by BloombergNEF, the global copper market will face a "large‑scale, long‑term shortage" starting in 2028, with the supply gap projected to reach 8% of demand by 2035 and widen further to 44% by 2050. The International Energy Agency has previously issued a similar warning.
Copper prices have already priced in expectations of tightening supply and demand. On the London Metal Exchange, copper hit a record high of $14,875 per ton last month, up 76% from the start of 2024. Potential copper tariffs under the Trump administration have prompted U.S. buyers to rush to purchase and stockpile copper, while the crisis in the Strait of Hormuz has tightened the supply of sulfur needed for copper smelting, further driving prices higher. If structural shortages continue to worsen, copper prices could face even greater long-term upward pressure.
With demand surging across multiple sectors, copper has become a critical bottleneck in the energy transition and the expansion of artificial intelligence.
Copper boasts excellent electrical conductivity and is a critical raw material for low-carbon energy systems, with widespread applications in solar power generation, electric vehicles, and related power infrastructure. Meanwhile, the rapid expansion of AI data centers is further boosting copper demand, as copper is indispensable—from internal components like servers to the power‑supply systems required to keep operations running.
Moreover, geopolitical turmoil is prompting countries to ramp up procurement of advanced military equipment, while rapidly growing developing economies continue to invest in infrastructure, both providing additional support for copper demand. BloombergNEF identifies these trends as among the major "megatrends" shaping the global economy and warns that a shortfall in copper supply could become a common bottleneck constraining their growth.
However, the supply side struggles to respond swiftly to rising demand. At the Financial Times Metals and Mining Summit in the UK last week, Teck CEO Jonathan Price predicted that by 2035, the copper supply gap could reach approximately 30%.
Mine development cycles can span up to 15 years, potentially subjecting the energy transition to greater shocks.
The core challenge in copper supply lies in the difficulty of rapidly bringing new capacity online. As Price points out, building a data center may take as little as six months, whereas discovering, obtaining regulatory approval for, and developing a new mine can take up to 15 years. Meanwhile, many decades-old mines are grappling with steadily declining ore grades, making it increasingly difficult for mining companies to maintain current production levels, while new mining projects remain relatively limited.
According to analysts at Wood Mackenzie, over the past two decades, institutional investors' risk appetite has shifted, further exacerbating supply constraints. Investors are increasingly inclined to press mining companies to boost operational efficiency at existing mines or expand through mergers and acquisitions, rather than committing capital to develop new mines that carry higher risks and longer development cycles. Moreover, many large, undeveloped copper deposits are located in countries with elevated political risks, further dampening Western mining firms' willingness to invest.
For mining companies, supply tightness translates into a more favorable long-term pricing environment. Price also noted that the copper market is poised for "very favorable long-term prospects." However, for downstream industries, persistent shortages mean higher raw-material costs and the inability to meet some demand.
AI data center operators with strong financial resources may be able to absorb higher procurement costs, whereas for developing countries with more limited budgets, rising copper prices could significantly increase the costs of grid infrastructure, renewable energy projects, and electrification upgrades, potentially even slowing down the green transition. As a result, the impact of the copper shortage extends beyond the metals market itself, potentially spilling over into the global energy transition and infrastructure investment.
Edited by melody