BHP Group Warns of Copper Supply Shortage Amid AI and EV Demand Surge

BHP warns AI growth will worsen copper shortfall

The growth of artificial intelligence will exacerbate a looming shortage of copper, a metal vital for the clean energy transition, miner BHP has warned. The rise of data centres and AI, which requires more energy-intensive computing, could boost global copper demand by 3.4mn tonnes a year by 2050, BHP's chief financial officer Vandita Pant told the Financial Times. "Today, data centres are less than 1 per cent of copper demand, but that is expected to be 6 to 7 per cent by 2050," she said. "There is a lot of copper in data centres." BHP, the world's largest mining company by market capitalisation, expects global copper demand will rise to 52.5mn tonnes a year by 2050, up from 30.4mn tonnes in 2021 -- a 72 per cent increase. AI is reshaping energy systems as well as demand for commodities around the world. The expectation of a shortfall of copper has triggered a race to secure access to mines, including BHP's unsuccessful £39bn bid for London-listed Anglo American earlier this year. In July BHP, along with Canada's Lundin Mining, paid $3bn to acquire exploration company Filo, whose assets include copper prospects. Copper is used in a range of industries and products needed to meet net zero targets, including power cables, electric vehicles and solar farms. Many analysts expect a global copper shortfall in the medium to long term. Data centres are expected to exacerbate this shortage in the shift to accommodate AI applications, which use more energy-intensive chips and increase energy needs. "Data centres themselves are becoming incrementally less copper intensive, but getting the electricity to them, that is copper intensive," said Colin Hamilton, commodities analyst at BMO Capital Markets. Copper is used not only to supply power to data centres but also in the cooling systems and to connect processors in the centre. However, others caution that long-term forecasts for copper in data centres are highly uncertain. "We are trying to predict the future of a market that we don't really know that much about," said one analyst. "We are at the dawn of AI, so how much AI will the world be using in 2050? We don't have any idea." Weak demand in China has weighed on copper prices this year, which are trading at about $9,207 a tonne, 15 per cent lower than their peak in May. The copper market is in surplus this year due to poor demand, and that will continue next year as well, according to BHP forecasts, before reversing towards the end of this decade. The company warned in August that rising demand for copper "in the final third of the 2020s" could lead to a "fly-up" pricing regime as demand outpaces supply.

BHP Group Sounds Alarm on Copper Supply, AI and EV Growth Could Drive Prices Soaring: Report - BHP Group (NYSE:BHP)

BHP Group warns of a copper shortage as AI and data centers grow. Mining company BHP Group Ltd BHP has flagged an acute shortage of copper metal as global Big Techs, including Microsoft Corp MSFT, Google parent Alphabet Inc GOOG GOOGL, Amazon.Com Inc AMZN, and more, splurge on their artificial intelligence ambitions. The growth of data centers and AI could boost global copper demand by 3.4 million tonnes a year by 2050, the Financial Times cites BHP's CFO Vandita Pant. Pant told the FT that BHP Group expects global copper demand to reach 52.5 million tonnes annually by 2050, up 72% from 2021. Previously, the mining company had warned against a possible rise in copper prices as the demand outweighed supply. Also Read: BHP Averts Strike At World's Largest Copper Mine, Stabilizes Chinese Copper Supply Copper is indispensable for industries pivotal to the zero-emission target, including power cables, electric vehicles, and solar farms. Therefore, a crisis in the metal could hamper the prospects of companies ranging from Microsoft, Google, and Amazon to EV companies like Tesla Inc TSLA and more lest Nvidia Corp NVDA, fails to supply AI chips to the Big Techs due to the copper crisis. JPMorgan analyst Patrick Jones projected a four million metric tonnes copper deficit by 2030, courtesy of EVs and renewable energy demand. The analyst also blamed China's weak demand, which accounts for over 50% of global copper demand. BHP Group's copper production rose 9% in fiscal 2024 for the second successive year, reaching 1.9 million tons. The average realized copper prices increased in fiscal 2024. BHP Group has snapped a 50% stake in Argentina's Filo del Sol and Josemaria copper projects, which have the potential to help accomplish a 70% increase in global copper demand by 2050. BHP Group expects the production to grow by another 4% in fiscal 2025, reaching 1.85 million tons-2.05 million tons. BHP Group's stock has been down close to 14% in the last 12 months. Investors can gain exposure to the stock through the Avantis International Equity ETF AVDTHE and Dimensional International Core Equity Market ETF DFAI. Price Action: BHP stock is up 0.42% at $53.11 premarket at the last check on Monday. Also Read: BHP To Unlock South American Copper Riches: Partners With Lundin For Filo Acquisition Benzinga Mining is the bridge between mining companies and retail investors. Reach out to [email protected] to get started! Photo via Shutterstock Market News and Data brought to you by Benzinga APIs