Copper markets are entering a structurally tighter phase as accelerating demand from artificial intelligence, data centers, and global defense programs collides with mounting constraints on mine supply. A new assessment from S&P Global suggests that the metal — long seen as a barometer of global growth — risks becoming a bottleneck for both economic expansion and strategic technologies over the next two decades.

Prices have already signaled stress. Copper recently climbed above $13,000 per metric ton in London, reflecting mine disruptions, inventory shifts, and precautionary stockpiling ahead of potential trade measures. While part of the rally has been amplified by short-term flows into US warehouses, the longer-term picture points to a more profound imbalance between supply and demand.

Demand Growth Accelerates Beyond Traditional Uses

Copper consumption has historically been anchored in construction, power generation, appliances, and transportation. Those pillars remain intact, but S&P Global’s analysis highlights a decisive shift: growth is increasingly driven by energy transition technologies and digital infrastructure. Electric vehicles, renewable energy, grid upgrades, and battery systems are expected to account for the largest share of incremental demand through 2040.

What is new — and increasingly material — is the scale of demand tied to artificial intelligence. Data centers alone are projected to expand nearly fourfold in installed capacity by 2040, sharply increasing copper use in power delivery, cooling systems, and server infrastructure. S&P estimates that AI, data centers, and defense spending combined could add roughly 4 million metric tons of annual copper demand by that point, effectively tripling today’s consumption from those segments.

An even more speculative, but potentially transformative, source of demand lies in humanoid robotics. If adoption accelerates as projected, copper requirements from robotics alone could rival several percentage points of today’s global consumption, adding further strain to an already tight system.

Structural Limits on Mine Supply

Against this backdrop, supply growth is showing clear signs of fatigue. According to S&P Global, global copper production is expected to peak near 33 million tons around 2030. Declining ore grades at mature mines, lengthy permitting processes, capital discipline among miners, and rising development costs are limiting the pace at which new capacity can come online.

Even with a substantial increase in recycled copper — forecast to more than double to around 10 million tons annually — the market could still face a deficit approaching 10 million tons by 2040. The concentration of supply among a small number of regions and producers further amplifies vulnerability to operational or geopolitical disruptions.

Prices, Incentives, and Strategic Risks

High prices are a double-edged sword. They improve project economics and encourage substitution or efficiency gains, but they also raise costs across supply chains that underpin energy security, defense readiness, and digital infrastructure. S&P cautions that while current prices benefit miners such as BHP Group and Rio Tinto Group, there is no guarantee that elevated levels will be stable over time.

The deeper risk is strategic rather than cyclical. With long development timelines and limited flexibility, copper supply may struggle to respond quickly enough to demand shocks, leaving governments and corporations exposed at a moment when electrification, AI deployment, and defense modernization are accelerating simultaneously.

Looking ahead, investors and policymakers will be watching whether higher prices translate into faster project approvals, technological breakthroughs in recycling and substitution, or increased geopolitical competition for critical resources. The balance struck over the next decade may determine whether copper becomes a constraint on growth — or a catalyst for a new wave of investment.