Copper's Looming Deficit: A 10-Million-Ton Shortfall by 2035

The global copper industry is on a collision course with a "structural deficit" between 2030 and 2035, requiring a massive ramp-up in production to meet skyrocketing demand. That’s the stark warning from Brandon Craig, president of BHP Americas.

According to Craig, the market needs an additional 10 million tons of copper between now and 2035. This means the industry must boost output by roughly 40% above current levels within the next decade alone.

This pressure is already reflected in the market. In January, copper prices hit a record high, with the London benchmark price approaching $13,000 per ton—a 40% increase from a year prior and a 60% jump from five years ago.

Surging Demand from China to AI Data Centers

The demand side of the copper equation is fueled by both traditional and emerging sectors. China, which consumes 60% of the world's copper, remains a key driver. While its residential sector has softened, Craig noted that demand is being sustained by a strategic push into advanced manufacturing.

"The underlying demand is being driven by other parts of the economy, principally manufacturing, and that continues to be really positive for copper," he explained, pointing to China's growth in electric vehicles and renewable energy projects.

At the same time, a new and powerful demand driver is emerging: the rapid expansion of data centers for artificial intelligence. Copper is essential for these facilities, used in everything from wiring and semiconductors to critical cooling systems.

While this digital segment is still in its early stages, its growth potential is enormous. According to BHP's analysis:

• Traditional Uses: Power cables and infrastructure still account for 92% of copper demand.

• Energy Transition: Green energy technologies make up 7%.

• Digital Infrastructure: Data centers and AI currently represent just 1%.

"It's currently a relatively small share of the market," Craig stated. "If you project forward sort of 10 or 15 years, it'll progressively become a more and more material impact."

The Supply-Side Bottleneck

While demand accelerates, miners face significant hurdles in increasing supply. A primary challenge is the declining quality of existing copper deposits. As mines age, the ore grade—the concentration of copper within the rock—naturally falls. Over the past three decades, the average ore grade has dropped by approximately 40%, making it harder and more resource-intensive to extract the same amount of metal.

The International Energy Agency (IEA) echoed these concerns last year, warning that without sufficient action, copper supply could fall 30% short of what's needed by 2035. "This will be a major challenge," IEA Executive Director Fatih Birol said. "It's time to sound the alarm."

BHP's Strategy: Tech, Investment, and Acquisitions

In response, major producers like BHP, the world's largest mining company by market cap, are deploying a multi-pronged strategy focused on technology, investment, and strategic acquisitions.

Boosting Efficiency with AI

At the Escondida project in Chile, the world's largest copper mine, BHP has successfully used technology to increase production by nearly 30% over the last three years. Craig emphasized that artificial intelligence and machine learning are central to this effort.

By analyzing real-time data from ore concentrators, AI helps optimize processing and improve copper recovery rates. It also identifies materials that could damage crushing equipment before they cause downtime, directly boosting productivity. "What's really important is you have choices in terms of how you operate the mine," said Craig, noting that AI helps "offset some of the constraints" impacting the industry.

Growth Through New and Existing Projects

BHP has also aggressively pursued growth by acquiring copper assets, including Australian miner Oz Minerals and Canadian-listed Filo Corp. The company also attempted to acquire London-based Anglo American in 2024 and 2025.

Alongside acquisitions, Craig highlighted the importance of investing in existing projects, such as Escondida, Resolution in Arizona, Kitlanya in Botswana, and Olympic Dam in South Australia. "For those companies like us who have world-class resource positions, we can absolutely invest into organic projects that are very competitive," he said.

Geopolitical Risks and the Path Forward

The copper market is not immune to geopolitical turbulence. Market volatility has been fueled by speculation over potential U.S. tariffs, while China's dominance in refined copper production creates potential supply chain vulnerabilities.

However, Craig believes the long-term fundamentals will ultimately outweigh short-term political shifts. The key, he argued, is building a more resilient and efficient global supply chain.

"The politics will change over time," he concluded. "But the fundamental demand and supply of copper is ultimately going to be determined by how efficiently we can connect mines, smelting, refining capacity and end use."