Copper is an effective conductor of electricity and heat, in addition to being malleable. It is used in different industries and products necessary for meeting net-zero targets, including solar farms, electric cars and power cables.
BHP Group Limited, a multinational mining and metals company based in Australia, forecasts a huge increase in the demand of copper globally in the next three decades. The company, which is the biggest miner by market capitalization globally, expects that this demand shall be driven by the transition to clean energy and expansion of data centers.
Artificial intelligence (AI)’s rise is expected to intensify the copper shortage, with BHP’s CFO Vandita Pant noting that global copper demand could surge by 3.4 million tons per year.
While data centers currently make up less than 1% of the red metal’s demand, this is expected to reach 6%–7% by 2050. BHP expects that by 2050, worldwide demand for copper will have hit 52.5 million tons annually, a 72% increase from the 30.4 million tons recorded three years ago.
Data centers house the computer components and systems needed for data storage and processing. The centers are expected to intensify the shortage of copper as they adapt to accommodate the applications of artificial intelligence. These apps increase overall energy requirements, particularly since they use energy-intensive chips.
Colin Hamilton, BMO Capital Markets commodities analyst, revealed that supplying electricity to data centers was extremely copper intensive. In addition to getting power to these centers, copper was also used to connect processors in the centers as well as in their cooling systems.
The anticipated shortage in the supply of the red metal has prompted a rush to secure mine access. For instance, BHP unsuccessfully bid to acquire Anglo American, a multinational mining company that holds copper interests in six operations in Chile. These operations include the El Sodado, Los Bronces, Mantoverde and Mantos Blancos mines.
In July, Lundin Mining partnered with BHP to acquire Filo Corp for $3 billion. Filo is an exploration company advancing the Filo del Sol project. The project hosts an epithermal gold-copper-silver deposit linked to a large porphyry gold-copper system.
BHP expects the red metal’s market to remain in surplus in 2024 and 2025 because of poor demand. China, which is the biggest copper consumer globally, has recorded weak demand, which has affected the metal’s price this year. Currently, the metal is trading at $9,207 a ton, which is 15% lower than its record high from May.
Exploration companies such as Aston Bay Holdings Ltd. (TSX.V: BAY) (OTCQB: ATBHF) may be well positioned to capitalize on the anticipated copper shortages by unearthing viable copper deposits within the North American region where the use of this metal is very high.
NOTE TO INVESTORS: The latest news and updates relating to Aston Bay Holdings Ltd. (TSX.V: BAY) (OTCQB: ATBHF) are available in the company’s newsroom at https://ibn.fm/ATBHF
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