BHP Group (NYSE: BHP), the Australian miner, expects the world to consume an extra 1 million metric tons of copper per year on average until 2035 due to the adoption of copper-intensive technologies, double the annual volume growth in the past 15 years.
Copper has long been used in the construction, transport, and power sectors due to its durability, malleability, and conductivity. In recent years, it is also used in making electric vehicles, green energy plants, and data centers.
In a report released on Monday, BHP Group (NYSE: BHP) said that global copper demand has grown at a 3.1% compound annual growth rate over the last 75 years. But this growth rate has been slowing to only 1.9% over the 15 years to 2021, it said.
“Looking to 2035, however, we expect this growth rate to jump back to 2.6% annually,” the report said.
Total copper demand in 2023 was 31 million tons, including 25 million tons of copper cathode and 6 million tons of copper scrap, according to BHP, which operates and owns most of the world’s largest copper mine Escondida.
“As we look towards 2050, we see a 70% surge in global copper demand to 50 million tonnes annually, driven by copper’s role in existing and emerging technologies, and in the world’s decarbonization aspirations,” said BHP Chief Commercial Officer Rag Udd.
The mining giant expects the energy transition sector will account for 23% of copper demand by 2050, from 7% currently, it said in the report.
The digital sector, which spans data centers, 5G, artificial intelligence, the internet of things, and blockchain, will account for 6% of copper demand by 2050, from 1% now, BHP forecast.
China’s demand will continue to grow, albeit at a lower rate, because its copper usage per capita is only half that of developed countries. India will also see growth, it said.
Meanwhile, high costs and depleting ore grades constrain the growth of copper mining output.
“We estimate the average grade of copper mines has declined by around 40% since 1991… We expect between one-third and one-half of global copper supply to face grade decline and ageing challenges over the next decade,” BHP added.
The total bill for all expansion capex from 2025–2034 is seen reaching around $250 billion, a significant increase from the previous 10 years when the total spend on copper projects was approximately $150 billion, BHP said.
(Source: ReutersReuters)
