BloombergNEF warns of a long-term copper shortage beginning in 2028, and Teck's chief executive forecasts a larger gap. Prices on the London Metal Exchange have already reached a new record. The squeeze threatens AI, defence and the green transition.
A looming shortage of copper is set to push up costs for AI, defence technology and the energy transition. In a report this week, BloombergNEF warned of a massive long-term shortage beginning in 2028. The Financial Times says the outlook is also a risk to infrastructure growth in developing countries.
Supply set to trail demand
BloombergNEF projects supply will undershoot demand by 8% in 2035 and 44% in 2050. The International Energy Agency has issued similar warnings of big impending deficits, according to the FT.
Jonathan Price, chief executive of copper producer Teck, predicted a shortage of about 30% in 2035 at the FT Live Metals and Mining Summit. He said new supply is slow to arrive. According to Price: "It can take 15 years to discover, permit and build a new mine."
Why miners are not closing the gap
Many copper miners are struggling just to maintain output at existing sites, many of which have operated for decades and face declining ore quality. Wood Mackenzie analysts said miners cut back exploration largely in response to pressure from risk-averse institutional investors. Some of the richest unexploited resources also lie in countries seen as having high political risk, such as the Democratic Republic of Congo.
Prices already climbing
The supply squeeze has yet to bite in earnest, but the London Metal Exchange price reached a record $14,875 per tonne last month, up 76% since the start of 2024. This year's Strait of Hormuz crisis cut Middle Eastern supplies of sulphur used in copper extraction. Speculation about forthcoming copper tariffs from the Trump administration has also driven stockpiling by nervous US buyers.
AI hyperscalers will no doubt pay whatever it takes to get data centres built, the FT says, so the impact on the pace and cost of the energy transition, especially in developing countries, may be more material.
Source: Financial Times
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