The adoption of artificial intelligence (AI) – and more specifically generative AI – has ramped up since early 2023 when ChatGPT opened up to the general public. This technology presents both opportunities and risks for the financial sector (Banque de France, 2024). Global investments in generative AI have skyrocketed, from USD 2.6 billion in 2022, to over USD 20 billion in 2023 (Our world in data, 2024), and the number of AI-related patents filed has increased sharply in recent years.
This growth in the development of AI generates an increase in the demand for electronic components used in data storage systems (chips, printed circuit boards), which are made from metals such as gold, copper, palladium and platinum. Among these metals, copper possesses essential properties for electronic systems, such as its electrical conductivity and resistance to corrosion. In particular, it is used in data centres for electrical power supply, cooling systems and connectivity. For example, the construction of Microsoft’s data centre in Chicago required 2,177 tonnes of copper. BHP mining corporation has estimated that the annual global demand for copper from data centres dedicated to AI is expected to increase sixfold to 3 million tonnes by 2050, or about 9% of global demand in 2050, up from 500,000 tonnes in 2024 (BHP, 2024). This sharp increase in demand could put pressure on the precious metals market and potentially lead to a risk of shortages if it occurs too quickly.
The acceleration in the growth of AI also results in an increasing demand for electricity with the creation of new data centres for developing new generative AI. By 2030, electricity consumed by AI is expected to account for 3% to 4% of global demand (S&P Global, 2023).
The demand for copper stemming from the growth of AI increases the risk of an imbalance between supply and demand, which has also been identified in the energy transition. The transition also requires metals, including copper, which are essential for the production of renewable energy (wind turbines, solar panels), energy storage (batteries) and recharging infrastructure for electric vehicles (Banque de France, 2023). Annual copper consumption for a low-carbon energy system is therefore expected to increase from 7.9 million tonnes in 2025, to 17.3 million tonnes in 2050, according to the International Energy Agency.
The increasing demand for copper could create risks for the copper market
The copper market is especially sensitive to the macroeconomic climate and geopolitical risks, and in particular to the economic situation in China, which accounts for over half of global demand. Therefore, the economic slowdown in China, particularly in the real estate sector, which is a major driver of demand, and the uncertainties surrounding the prospects for recovery, contributed to the increased volatility of copper prices in 2024 (Chart 2).
Chart 2: Price of copper and 30-day volatility