Amidst an intensifying global transition toward electrification, copper demand is expected to soon outstrip supply. Known as one of the most important metals for electrification, copper is essential for energy transmission, renewable power, electronics, electric vehicles (EVs), battery storage and a host of other use cases.
In addition to all of the above, there’s an emerging sector that analysts believe will drive demand for the base metal even higher: artificial intelligence (AI) and the digital economy.
Investors keeping a close watch on copper would do well to examine how the growing AI sector and explosion in demand for data centres could impact the copper market.
The demand for copper is viewed as a reliable leading indicator of economic health and GDP growth — often referred to as “Dr. Copper.” Copper has been mined for thousands of years and has broad applications across most sectors of the economy, from industrial to medical products. Now, however, it’s seen as a vital component in the push towards electrification.
Currently about 22 percent of overall copper demand comes from energy, and that is likely to increase in the next two to three decades due to changes in how we produce and consume energy.
These data centres require copper not just for power distribution, grounding and interconnects but also for incremental power generation. Within the United States alone, this could increase demand for copper by up to 1.5 percent. Even a one percent shortage could be enough to create a major market deficit.
“To keep up with projected [copper] demand, [mining companies] would need to spend $16 billion per year,” Jon Case, vice president, portfolio manager and research lead (equities) at CI Global Asset Management, told Morningstar. “That money doesn’t exist in the industry.”
Eastern Metals has a high-quality asset portfolio located in some of Australia’s most renowned mineral provinces in the Northern Territory (NT) and New South Wales. The company’s current goal is to progress its two advanced exploration projects with well-targeted exploration. Located in the NT between Alice Springs and Tennant Creek, the Arunta Project comprises Eastern Metals’ flagship copper project.
The highly prospective assets contained within the Arunta Project include Home of Bullion, Mulbangas and Prospect D. Home of Bullion is a polymetallic, structurally controlled, high-grade volcanic massive sulphide-style deposit with a mineral resource estimate of 3.1 million tonnes at 2.9 percent copper equivalent. It’s also strategically located between the Stuart Highway, the Adelaide-Darwin rail corridor and the Amadeus gas pipeline, east of Barrow Creek.
Sandfire Resources America’s parent company also maintains copper mining and exploration projects in Botswana, Australia and Spain.
Copper was already essential to electrification and sustainable energy. With the rise of AI and the requirement for bigger, more powerful data centres, the base metal’s critical role in supporting the digital economy is increasingly being recognised. Investors with an interest in copper projects may also want to keep developments in AI on their radar, as an emerging contributor to an increasing copper supply crunch, and identify strategic opportunities for investment.
This INNSpired article was written according to INN editorial standards to educate investors.
INN does not provide investment advice and the information on this profile should not be considered a recommendation to buy or sell any security. INN does not endorse or recommend the business, products, services or securities of any company profiled.
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