Commodity trader Trafigura has suggested a steep increase in copper demand by 2030. It has estimated that global demand may increase by 1 million metric tons of copper by 2030, linking it to the artificial intelligence industry and the increasing number of data centers. The increasing pressure on automobile companies for carbon emissions has forced them to look for alternate and renewable energy sources, which is now transitioning the energy needs from fossil fuels to electric power. This transition has also fueled the demand for more power batteries and, as a result, for more copper.
Supply may fall short, but copper demand is increasing over time
The chief economist of Trafigura, Saad Rahim, attended the Financial Times Gobal Commodities Summit in Lausanne, Switzerland, and revealed some eye opening facts about the copper demand and supply situation. According to him, AI is the key factor that has increased demand for data centers. he said,
“If you look at the demand that is coming from data centers and related to that from AI, that growth has suddenly exploded.”
He didn’t express what the total demand for copper will be in 2030, though he mentioned the already-existing shortage in supply. As he added,
“On top of what we have as four to five million ton deficit gap by 2030 anyway. That’s not something that anyone has actually factored into a lot of these supply and demand balances.”
Reuters
Reuters said that according to their survey conducted earlier this year, copper demand is forecast to be around 26 million tons globally by 2024. And also that it is expected that the deficit in copper supply will increase to 100 thousand tons by the next year.
Geopolitical scenario
Looking at the global suppliers and buyers, it becomes evident that China is the largest producer of copper, along with the fact that it is the largest consumer as well. reason being a manufacturing giant, aka global factory for production. Chinese mining firms own the majority of the copper mines in the Congo, which is the largest copper producer in Africa. Chinese firms enjoy a high level of tax benefits in Congo that no other country can avail of.
China also controls many other metals essential for battery manufacturing and energy transition, which is another concern for western countries in comfortably achieving their net zero carbon emission goals. As China dominates the production of critical raw materials for production, and the West is not on strong ground in this regard, any escalation in geopolitical tensions can also affect the green cause, which is at the mercy of battery power made from these very elements, unless a shockingly big breakthrough happens in battery technology.
Last month, Spglobal published an article in which Trafigura’s chief economist, Saad Rahim, said that each copper project is now 30% smaller, he was comparing the size to what it was a decade ago. He emphasized that you need more projects to keep the supply going, for which the gap is already widening.
Original report at Reuters.
