Wood Mackenzie warns of global copper shortage, price volatility

A new report from Wood Mackenzie predicts that copper demand will increase by 24 percent globally by 2035. That equates to an 8.2 million metric ton increase per year to reach 42.7 million metric tons annually.

In its new Horizons report, “High-wire act: Is soaring copper demand an obstacle to future growth?”, Wood Mackenzie says traditional economic development and new structural demand from electrification and digitalization will drive this growth. 

While this growth trajectory seems certain, Wood Mackenzie warns that four disruptors could amplify demand and price volatility beyond these expectations, potentially adding an extra 3 million metric tons per year of demand growth, or 40 percent of total copper demand growth, by 2035. 

Data centers present volatility wild card 

Among these disruptors, data centers represent the most unpredictable variable in copper demand forecasting, Wood Mackenzie says. Artificial intelligence (AI) is set to consume an additional 2,200 terawatt hours of electricity by 2035, according to global data center projects Wood Mackenzie's Power team is tracking. As a result, copper demand for grid infrastructure alone would increase to 1.1 million metric tons per year by 2030.  

Because copper represents less than 0.5 percent of total data center project costs, developers remain largely indifferent to its price movement. A sudden surge in construction could trigger price spikes of 15 percent or more, rapidly depleting inventories and intensifying volatility, the consultancy says.

“Data centers create inelastic demand in the market,” says Peter Schmitz at Wood Mackenzie. “When developers require copper for the expansion of data centers, it is used with little concern for the copper price. This dynamic in a nascent sector makes data centers an unpredictable and volatile source of demand this decade.” 

Energy transition reshapes structural demand 

Beyond AI-driven demand, the broader energy transition plays a fundamental role in reshaping copper consumption patterns.

The shift to renewable energy systems will require an additional 2 million metric tons per year of copper supply over the next decade, according to Wood Mackenzie. The geopolitical implications of copper supply chains have become increasingly apparent as nations seek to reduce reliance on volatile energy imports. Copper demand from the sector is projected to climb from 1.7 million metric tons per year to 4.3 million metric tons by 2035, an annual growth rate of 10 percent, the report notes. 

“Each electric vehicle contains up to four times more copper than a conventional car,”  Schmitz says. “As battery technologies advance, copper demand intensity across charging infrastructure and power systems will remain high. By our forecasts, EV-related copper demand is set to double by 2035, cementing the metal’s role at the heart of the global energy transition.” 

Asia’s industrialization speeds copper growth 

India and Southeast Asia are emerging as powerful engines of copper consumption, with their rapid industrialization expected to add 3.3 million metric tons per year of demand by 2035. This translates to average annual growth rates of 7.8 percent and 8.2 percent, respectively, Wood Mackenzie says.  

If these economies replicate even half of China’s historical growth path, their construction and power sectors could require an additional 5.4 million metric tons per year of copper. With per-capita copper use still far below global averages, these markets represent substantial long-term upside for demand, the report adds.

Defense spending adds to demand dynamics 

The fourth disruptor stems from shifting geopolitical priorities. Europe’s decision to raise defense spending to 3.5 percent of gross domestic product (GDP) amid Russia’s invasion of Ukraine and shifting global security priorities adds modest direct copper demand of 25,000 to 40,000 metric tons annually over the coming decade. However, the broader impact will be felt through infrastructure resilience and modernization, the report states.  

“Rising defense budgets are creating a quiet but meaningful source of incremental copper demand,” Schmitz says. “While the headline numbers for military hardware appear limited, the supporting infrastructure, including hardened power networks and communications, is also copper-intensive, adding scale to copper demand for defense through what appears to be normal development. This dynamic adds another layer of pressure to an already tight supply environment.”

Defense firms worldwide are signaling expansions across fighter programs, missile-tracking systems and ammunition production, with infrastructure following suit, reinforcing copper’s growing role in the industrial-military complex. 

Supply challenge intensifies amid climate pressures 

Meeting the projected demand growth will require more than 8 million metric tons per year of new mine capacity and 3.5 million metric tons of additional scrap by 2035. Wood Mackenzie estimates the industry may need to lift its baseline assumption for annual mine disruptions from 5 percent to 6 percent, effectively removing 250,000–300,000 metric tons from the market each year and tightening supply further. 

In a supply-constrained environment, the convergence of these four disruptors could result in prolonged periods of high prices and unpredictable market fluctuations, according to the report.

“Copper has become the strategic bottleneck of the global energy transition,” says Charles Cooper, research director, head of copper research, Wood Mackenzie. “From Detroit to Shenzhen, the impacts of commodity supply chain disruptions and the industry’s inability to deliver will be acutely felt. If governments and investors fail to act, we risk turning the metal of electrification into the metal of scarcity.” 

“If the West wants to compete, it must stop relying on market forces alone, or at least make them work more effectively,” the report notes. “Governments and industry need to pool resources, back high-risk projects and build public-private consortia that can move as fast as Chinese state-owned enterprises. The Reko Diq copper-gold project, stalled for decades, illustrates why decisive intervention is critical.”

Wood Mackenzie says direct investment in mining, refining and processing beyond streams and royalties is essential, along with tax incentives and co-investment funds for early stage exploration.

“Long-term offtake deals, strategic stockpiles and infrastructure-for-resources partnerships under G7 or European Union initiatives can give miners certainty and host countries a real alternative.”