According to Caixin News on September 16th, although the global copper market is currently in a weak demand phase, mining giant BHP Group Ltd still warns that copper demand will skyrocket in a few years, which will cause copper prices to also surge.

BHP Group Ltd believes that with the development of the AI wave, copper demand will also soar in the future. They point out that copper is a critical metal for the clean energy transition, and the development of AI will exacerbate the copper shortage problem.

The AI wave will drive the surge in copper demand.

Vandita Pant, Chief Financial Officer of BHP Group Ltd, stated that by 2050, the rise of data centers and AI could increase global copper demand by 3.4 million tons each year, as this technological development requires more energy-intensive computations.

"Currently, data centers account for less than 1% of copper demand, but by 2050, this proportion is expected to reach 6% to 7%."

Based on market cap, BHP Group Ltd is the world's largest mining company. The company predicts that by 2050, global copper demand will increase from 30.4 million tons in 2021 to 52.5 million tons per year, a growth rate of 72%.

Currently, the global copper market is still in a weak oversupply phase. According to BHP Group Ltd's forecast, due to low demand, the oversupply situation in the copper market this year will continue into the next year and will only reverse by the end of this decade (around 2030).

The company warned in August of this year that "in the last third of the 2020s (approximately 2027 to 2030)", global demand for copper will continue to rise, potentially leading to demand surpassing supply and causing prices to soar.

Currently, AI is reshaping energy systems worldwide, as well as the demand for commodities. Due to market expectations of a potential shortage in copper supply, parties are competing to acquire copper mines, including bhp group ltd's earlier plan to acquire London-listed company Anglo American for 39 billion British pounds, which was unsuccessful.

In July of this year, bhp group ltd also acquired exploration company Filo for 3 billion US dollars, which includes copper exploration assets, from Canadian mining company Lundin Mining.

Copper is widely used in the clean energy transformation.

Copper is used in a range of industries and products required to achieve net zero emission goals, including electrical cables, electric cars, and solar farms. Many analysts expect a shortage of global copper supply in the medium to long term.

In the wave of AI, a large number of data centers are expected to exacerbate this shortage, as AI applications use more energy-intensive chips, increasing energy demand.

Colin Hamilton, a commodity analyst at BMO Capital Markets, said: "Although the copper intensity required by data centers themselves is gradually decreasing, the industry powering them is still copper-intensive."

Copper is used not only to power data centers, but also in cooling systems and connecting center processors.

However, some Wall Street businessmen have warned that there is a high degree of uncertainty in the long-term forecast for the use of copper in datacenters.

An analyst said, "We are trying to predict the future of a market that we don't fully understand... We are at the dawn of artificial intelligence, so how much artificial intelligence will the world use by 2050? We don't know either."

Editor/Somer