Copper prices are experiencing a historic rally, ending 2025 with a remarkable 44% gain and reaching fresh all-time highs this week, driven largely by the explosive growth of AI infrastructure and data centers. According to a recent S&P Global analysis, copper demand is projected to increase by 50% by 2040, reaching 42 million metric tons, with the AI boom serving as a critical driver of this unprecedented surge.
The supply side presents a stark challenge to meeting this demand. S&P Global warns that the mining industry faces significant constraints from aging mines and regulatory hurdles, making it extremely difficult to keep pace with consumption. Without new mines or technological breakthroughs, the report predicts copper production will peak in 2030, creating a massive shortfall of approximately 10 million metric tons by 2040.
Carlos Pascual, Senior Vice President of Geopolitics and International Affairs at S&P Global Energy, emphasized copper’s strategic importance, calling it “the connective artery linking physical machinery, digital intelligence, mobility, infrastructure, communication and security systems.” This critical role has led several countries, including the United States in 2025, to designate copper as a “critical metal.”
José Torres, chief economist at Interactive Brokers, explained that copper’s elevated prices reflect its global strategic importance, particularly for AI development. “Nations want to stockpile the cyclical metal to bolster sovereign AI prospects,” he told Business Insider. “Governments are afraid that without enough copper, their economies won’t remain competitive in a world where advanced technology is increasingly adopted.”
Rita Adiani, president and CEO of Titan Mining Corporation, highlighted that the demand surge is directly tied to electrification, grid expansion, data centers, AI infrastructure, and defense applications. She noted that copper’s superior conductivity and reliability make substitution extremely difficult in these critical applications, ensuring sustained demand pressure and likely higher prices for the foreseeable future. The metal’s industrial importance distinguishes it from precious metals like gold and silver, which some forecasters predict may decline in the near term.
Key Quotes
Copper is the connective artery linking physical machinery, digital intelligence, mobility, infrastructure, communication and security systems.
Carlos Pascual, Senior Vice President of Geopolitics and International Affairs at S&P Global Energy, explained why multiple countries have designated copper as a critical metal, emphasizing its fundamental role in connecting AI systems to physical infrastructure.
Broadly, it has to do with limited supply as nations want to stockpile the cyclical metal to bolster sovereign AI prospects. Governments are afraid that without enough copper, their economies won’t remain competitive in a world where advanced technology is increasingly adopted.
José Torres, chief economist at Interactive Brokers, described the geopolitical dimension of copper demand, highlighting how nations view copper reserves as essential to maintaining AI competitiveness and economic leadership.
A significant part of the incremental demand is tied to electrification, grid build, data centers/AI and defense, where copper’s conductivity and reliability makes substitution harder in critical applications.
Rita Adiani, president and CEO of Titan Mining Corporation, identified the specific sectors driving copper demand growth, emphasizing that AI data centers and related infrastructure represent irreplaceable use cases due to copper’s unique physical properties.
Our Take
The copper supply crunch represents an underappreciated constraint on AI expansion that could fundamentally reshape the industry’s growth trajectory. While much attention focuses on semiconductor shortages and energy consumption, the physical wiring and electrical infrastructure required for AI data centers depends entirely on copper. The 2030 production peak prediction suggests we’re only five years away from a structural deficit that no amount of investment can quickly resolve—new mines take decades to develop. This could force innovation in copper recycling, alternative materials research, or more efficient data center designs. The geopolitical implications are profound: nations with copper reserves or mining capacity gain strategic leverage in the AI race, potentially creating new resource dependencies similar to rare earth elements. Companies planning major AI infrastructure investments should factor rising copper costs into their long-term financial models, as this commodity constraint could prove more limiting than computational challenges.
Why This Matters
This story reveals a critical infrastructure challenge facing the AI revolution: the physical materials needed to power it. As AI companies race to build massive data centers and expand computing infrastructure, copper emerges as an essential bottleneck that could constrain technological progress and economic competitiveness. The predicted 10 million metric ton shortfall by 2040 represents a significant supply-demand imbalance that could drive prices substantially higher and force difficult choices about resource allocation.
The designation of copper as a “critical metal” by multiple nations, including the U.S., signals growing geopolitical competition over AI infrastructure resources. Countries recognize that access to copper directly impacts their ability to develop sovereign AI capabilities and maintain technological leadership. This dynamic could reshape global trade relationships, mining investments, and strategic resource policies. For businesses investing in AI infrastructure, rising copper costs could significantly impact data center construction expenses and operational budgets, potentially slowing AI deployment or forcing innovation in materials science and efficiency.