BHP Sees Trend Reversal In Copper Growth, Warns Recycling Won't Be Enough

BHP BHP expects global copper demand to grow by around 70% to over 50 million tons annually by 2050. The mining heavyweight released a new study pointing out the issues of the current cycle, including aging deposits and a less healthy pipeline of potential mining projects.

The detailed report shows that copper's average annual demand growth was 3.1% over the last 75 years, but it significantly slowed down to 1.9% in the 15 years leading up to 2021.

The firm now expects a resurgence and growth of 2.6% through 2035, driven by three categories: traditional economic growth, green energy transition (renewable energy), and digital developments (data centers).

Three Pillars Of Demand

Emerging markets are also expected to play a role, as improving living standards drives copper demand. China and India, two of the world's most populous nations, provide a strong case for this scenario.

For example, despite China's massive copper consumption in the past two decades, its per capita stock of copper is still only half that of developed economies.

India's situation is similar, with electricity consumption significantly lower than that of China or Japan, suggesting the potential for a five-fold growth in copper demand in the coming decades.

Furthermore, the energy transition will provide additional momentum. Renewable energy sources like wind, solar, and hydro heavily rely on copper, as do electric vehicles (EVs) and their batteries, which need about three times more copper than internal combustion engine vehicles.

BHP expects the ongoing energy transition to account for more than 20% of total copper demand by 2040. Copper is also necessary for energy-efficient technologies like smart grids, heat pumps, and LED lighting.

As artificial intelligence (AI) technologies and data processing expand, the need for digital infrastructure will be another major contributor to future copper demand.

Data centers, which currently consume about 2% of global electricity, are expected to increase their copper demand sixfold by 2050. Digital growth is self-reinforcing, as it also drives energy demands—and if that energy comes from renewable sources, it requires more copper.

Supply Side's Persisting Issues

On the supply side, BHP is warning about significant challenges. Existing copper mines are aging, and large-scale greenfield copper prospects like Oak Dam in Australia are few and far between. Meanwhile, new projects—whether current mine expansions or entirely new developments—are increasingly complex and expansive.

Additional drawbacks include declining ore grades and the need for substantial investment to modernize aging infrastructure. In the next decade, supply will be strained as copper production from existing mines could drop by 15%.

BHP expects the market to try to mitigate these challenges through recycling and secondary supply. By their estimates, scrap could account for up to 40% of copper supply by 2035. However, even with increased recycling efforts, the market will still need new mines—by their estimation, around 10 million tons of new mined supply for the next decade alone.

Owing to increasing costs, regulatory hurdles, and technical challenges of working with lower-grade deposits, BHP believes the long-run marginal cost of new projects will likely determine future copper prices. Thus, the industry must develop high-quality brownfield expansions and new greenfield projects to solve these issues.

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