Welcome to Energy Evolution, where we explore the forces transforming how we power, fuel and electrify our future from S&P Global Energy. I'm your host, Ekla Viyagupte, and in this episode we confront what might be the defining supply challenge of our generation. One that could determine whether our energy transition succeeds or stalls. Every electric vehicle rolling off the production line, every wind turbine, every data center powering our AI revolution. They all have one thing in common, they're absolutely dependent on copper, and that is the focus of this episode. A new study from S&P Global released in early January drops some sobering numbers that would wake up anyone involved in the energy transition. The study finds that the accelerating pace of electrification is projected to swell copper demand to 42 million metric tons by 2040, a 50% increase from current levels. Yet by 2040 we're also looking at a staggering 10 million metric ton copper supply deficit. That's 25% below what we'll actually need, but here's the paradox that makes this even more fascinating. Copper is the great enabler of electrification, yet the accelerating pace of electrification is creating an unprecedented challenge for copper supply. This boom for copper is being driven by a host of factors, we're not just talking about the usual suspects driving demand. Yes, electric vehicles and renewable energy are massive copper consumers, but now we have entirely new vectors emerging. The AI boom, defense spending, and some projections even suggest we could see billions of humanoid robots by 2040, each one requiring significant amounts of copper. Meanwhile on the supply side we're facing loads of challenges. It takes on average 17 years to get a new copper mine from discovery to production. Or grades are declining, costs are rising, and the regulatory environment remains complex. To add to that the supply chain is incredibly concentrated. China controls 40% of global smelting capacity, creating potential multirabilities that go far beyond just market. And to add to this, it has been an extremely eventful start to copper prices in 2026. The London Metal Exchange Sport price of copper hit a record high on January 6th, rising above 13,000 metric tons, amidst geopolitical uncertainty along with disruptions at several of the world's leading mines. We will be speaking to two experts. First we will speak to Patricia Beretto, a senior principal analyst at the metals and mining research team at S&P Global Energy Sarah. Later we'll be joined by Eric Sederholm, who is the managing director of exploration at the American Pacific mining corporation, the precious and base metals explorer and developer focused on opportunities around North America. Eric will give a perspective on what it's like to bring new copper supply online in this environment and how recent policy changes are affecting the industry. But first, let's go straight to our interview with Patricia. Hello Patricia. Welcome to the Energy Evolution podcast. It's great to have you here. I think this is a really good time to have a podcast on copper, both because obviously we've seen prices surge at the start of 2026. But also since at S&P Global we've produced a report known as Copper in the age of AI, the challenges of electrification. And Patricia, it's great that you being one of the contributors to this report can join us. Maybe to start off with what would you say are some of the big talking points or even some of the big numbers of statistics that really scream out in this report? The report projects global refined copper demand rising from about 28 million tons last year in 2025 to roughly 42 million tons by 2040. So that's a 50% increase during by four main factors. The core economic growth, which the traditional construction manufacturing demand, the energy transition and addition, which are these renewable energy, grades, AI and data centers and defense. But about half of the net growth to 2040 is expected to come from the energy transition and addition. So there's a paradox there that every step of the energy transition is copper intensive. But the cumulative effect is a demand surge that the copper industry cannot match on current timelines and economics. Thank you for the fascinating shows how so many different sectors are at play. One of the big projections is also this sort of supply deficit that we might see, especially in 2040. I think it's projecting a 10 million metric tons supply deficit. So can you put that in perspective for our listeners and why are we going to see that gap? Yeah, so building on what I mentioned on the supplies side, even with more recycling, the system should only cover about 32 million tons by 3040 implying this 10 million deficit. That accounts for around 25% of projected demand by that time or the size of the entire current US plus Europe plus Japan copper use combined. So unless there's a large coordinated ramp up of mining, processing and recycling, we expect this to play gap to happen. As you came up with this report, it's been a very sort of eventful time for copper prices. What is driving the current price surge? And since you're on the analyst side, what are some of the outlooks that you're seeing for copper prices? Well, I think the main question here is, are the prices here to stay and structurally, yes, since copper belongs in a higher price regime to clear the supply gap, expected in the next decade. But sickically, no, so this 13,000 dollar per ton we saw in January is ahead of what most analysts use and their models and we do expect some give back from these extremes. Copper has actually shifted into a structurally higher price range post-COVID as demand climbed while supply struggled to keep up. That hasn't changed. If anything, the recent mine disruptions that helped build on this price in January and project delays have reinforced that tight long term picture. What's new is the speed and scale of the latest rally in early January, Alameda blasted through this 13,000, which is a record and kept setting fresh records, helped not only by the supply kindness, but also by macro and geopolitical flows. From long term picture, do high copper prices help solve some of the supply problem or do you see it creating more challenges and even more complexity? Yes, so high prices are absolutely a necessary signal without them that there is a 17 year development timeline that the report highlights that simply don't work and the supply gap never gets closed. Our study shows that once you factor in falling grades, higher strip ratios and ESG costs, the incentive price to bring a big new greenfield copper project online now sets well above historic averages. There are two big catches here. First, developers don't trust the 13,000 dollar per ten, they underwrite projects at long term prices, although these are expected to keep increasing. A short lead bike like this doesn't magically unlock a new wave of new minds. Second, the high prices are attacks on electrification, which means they make every transformer, every grid upgrade, every solar farm, or electric vehicle and NEA data center, more expensive, which can slow or derail projects, in which copper represents especially the ones in which copper, represents a large share of copper, and possibly push towards substitution.
Finally, high prices are necessary, but they're not sufficient. They help justify new investment, but on their own, they don't fix the structural bottlenecks like the 17-year lead times permitting lack of melting capacity outside of China or the growing social and geopolitical risks. In the short run, they are doing as much to stress the energy transition as they are to solve the supply side. Now, China controls a large amount of copper-smelting capacity. Is this Chinese dominance expected to continue in the coming years and decades? What are some of the changes that one might see on the global supply and demand front? Well, we're going to turn it. We do expand their dominance to not only keep existing, but maybe even increase. We did see in 2025 some increasing refined capacity, which was kind of unexpected in an environment where the climate change market was really tight, and the melting was operating sometimes at losses. We do see this capacity strong and does keep happening in the future. Nearly half of processing is in one country, so approximately 40% of copper-smelting capacity is in China. Any trade dispute, any environmental crackdown, power shortages, or export restrictions can ripple through an entire copper chain. The report explicitly calls this geographic concentration of smelting and refining a systemic risk that exposes the market to geopolitical shocks, and we do expect that to continue in the future. The US also plays a very important role in the copper market, and we also seen the US Trump administration branding copper as a critical mineral. So maybe a little bit on how the tariffs have affected this market and also the importance of copper in energy security. Yeah. So the US has recently formally designated copper as a critical mineral, which means that to signal that policymakers see supply security of copper as a strategic issue. In the report, the supply chain comparison, the US is strong in demand and downstream manufacturing, but it's relatively weak in both mining and refining. So considering future demand, you realize on approximately 50% of metal imports. And then when we talk about tariffs and expert controls in constraint markets, that typically increase domestic costs for a copper intensive component. Nevertheless, there is some additional supply that may materialize from the domestic policies or either additional supply or anticipated supply, such as the development of new mining and smelting capacities. We did see some news that we didn't anticipate in 2025. Since you're based in Brazil, it'd be good to get an Latin American perspective on how are different parts of the world? What's their sort of outlook and policy on copper? I think in Latin America, we have two of the major copper miners, which are Chile and Peru. They have recently go through different political issues, and especially more recently Chile has gone through this process of possible tariffs being implied on their refined exports into the US. They are the main important in the US. So we believe they will continue to be very important suppliers, but then the GRC or the Congo has recently increased their supply. So they become a very important player as well in the concentrated side. And they will keep having more projects online or increasing the production, especially through brown fudes or expansions, mining expansions. You mentioned AI and data centers. So it'd be good to give a listen to some insight on what's the role of copper in AI and data centers and how much copper would they typically consume? So data centers actually use copper through everything. So from the energy that it's necessary to the grid that will be necessary to connect the data centers, but also all the processing capacity uses copper. A large 230 megawatt data center is modeled at 44 tons of copper per megawatt, meaning it uses nearly 10,000 tons of copper. Across all types of facilities, data center copper demand is projected to rise from about 1.1 million tons and 2025 to 2.5 million tons by 2040, which is not a significant share of demand, but it's a significant share of growth. And AI data centers alone account for 58% of data center copper demand by 2030. It's important to remember that this is a sector that has very low capability to substitute copper. Copper is very important because of its electrical conductivity and it's unique in terms of the effectiveness that it brings to the data center. Now to get more of a perspective on how the industry is reacting both to this unprecedented demand and supply challenge that we're going to see in the coming years, but also to the current rising prices, let's speak with Eric Sederholm from American Pacific mining corporation. Hello and welcome to the Energy Evolution podcast, Eric. Great to have you here. Maybe let's start off with how a company like yours is viewing this current price boost. Are these levels surprising or was it just a matter of time? I think the magnitude is a bit surprising. If you'd asked me a year ago what you thought copper would be right now, I would say probably just over $5. I figured it would plateau out a little bit, it'd say $5 a pound. The astronomical increase I think is coming from the awareness of the world that even though we had a surplus last year of copper, this year it's going to break even and next year we will not have a surplus. So a lot of the increase is baked in the cake a bit, but it's certainly driven by demand. Very interesting. Copper is often called Dr. Copper in fact for its ability to almost an indicator of economic health. So with the current geopolitical tensions and maybe some of the headwinds economically, what is copper pricing really telling us about the global economy right now? I think it's a big question Mark and that's the reason why copper, gold and silver are obviously quite separate are acting in such a kind of a strange, bullish way. The big deal I think with Dr. Copper philosophy really has always been, it's an immediate indicator of economic ups or downs. So you could shut it off in a minute. If we got bad economic news across the world, copper used to shut down very quickly. I think the realization now is that we're living in future more of a prognostication type thing. We're living in saying, okay, we have to live for a year from now or two years from now or ten years from now rather than just the immediacy. So that's the big thing is I think it's really it's the intangibles that are driving copper up as much as the fundamental need. Yeah, no very interesting actually. You mentioned that and maybe coming back to fundamentals, what are some of the fundamentals that play right now besides obviously the sort of supply outlook for the coming years? The driving factor has always been historically Chinese demand that maybe we can't get away from that. 50% of all the copper produced as a finished product is either held by China or dealt by China or used by China. That is just something we've lived with. In the next ten years, especially two things are going to happen. One, we have to electrify a lot more people in the world. That's going to take a lot of building because if you look at the infrastructure safe of the United States compared to say Africa or other other countries that have traditionally not had the demand, we just have to improve our infrastructure. We just have to say this isn't working right but we have it. We just need to enhance it. When you get into other countries that have not experienced that infrastructure build, it has to be from the ground up. So they're starting from absolute zero where we're starting at say 60 or 70%. China has gotten to that level right now. For the last 15 years, China has had really have been building a lot of infrastructure from the ground up. That is going to flatten out here in five years or so to demand from China in their actual uses is not going to be pronounced. But elsewhere in the world, what they're not getting is going to exceed what right now is available. So when you see India in a massive electrification, when you see lots of other countries
that have had very poor infrastructure, that's going to fill in the gap and in spades as well. It's going to be much more than just the United States and China demanding the copper. We've seen lots of analyst reports in recent weeks and months about the staggering supply deficit that we might see. So maybe from your perspective is someone who is actively developing and producing copper. How are you looking at this timeline? And what are you seeing on the ground that supports or challenges some of these projections? The big challenge that the United States has, and I believe you could speak for everyone but China, is that we don't have copper coming online very quickly. And that is regardless of the administration, regardless of who's pulling the strings and making the laws, that is a very big thing. It's 15 to 20 years to get a mind. If I go drill five holes and I think I have a great big giant deposit, it's going to take me 15 to 20 years to actually get anything out of that deposit. Now that's moving a little bit but it's still stuck. And so the United States, I think in other countries, are going to have to expedite that. So if you do have a quality copper project, you are going to be funded to get this done. Having copper as a critical element, a critical metal, that should have happened years and years ago because it is the most crucial thing to the well-being of the world. So from our standpoint, regulations have come down a bit, but probably not enough. And money is coming into these big companies. Now we are going to be able to turn on the United States. We'll be able to turn some of these into pretty good minds, but even they're not going to make a dent in what we really need. We import in the United States half of what we need. So to get to the stasis, we're going to have to double our production. And that doesn't happen quickly. We don't have enough smelter capacity. We don't have enough processing capacity. So we could wind up with ore sitting on stockpiles and have nowhere to put it. We have two functioning smelters in the United States. China has, I believe, 29. So what they're doing mainly is importing the raw metal, which we really can't do because we don't have the process. So we're just going to have to keep purchasing refined metal. Okay, interesting. So you're basically saying to some extent that the long lead times of these copper projects from discovery to production, that's not really going to reduce as much as one would like. Right? Current forecasts are really for the United States to not be able to increase our production for about a decade. And so we're just going to have to live with the fact that we are going to have to purchase that metal rather than producing it on our own. Regardless of how many minds we put online, we're going to hit a bottleneck. And that bottleneck is a $5 billion plus or minus smelting facility or processing facility. Lots of them. We need to get ourselves to about 15 or so active smelters throughout the country. You mentioned that the tariffs have had a bit of a role to play, especially in the last few months for copper. So what are some of the impacts that we're seeing from copper because of these policies? And what do we expect to see maybe more often in 2026? First, one that's quite obvious is the fact that the price has gone up so much. And that's a reflection, I believe, of panic a bit or certainly uncertainty companies and people that do make the products that we use are a little bit unsure of the future. And that always breeds purchasing kind of your rationality a little bit as the markets level out. The tariffs were well thought out, but they've been implemented, you know, I think a bit of a haphazard way. It was going to be this one day and that one day and it's drastically affected the price of copper, which I think is going to continue to rise well above $6 in the next year. And that was something I would not have said a year ago. So if you're looking at what the tariffs are doing, they're putting a pinch on us in the United States, especially to produce, yet we don't have the ability to do it. That's the main thing. And also there was talk about tariffs on some of the mining equipment and the extraction technologies, you know, how is it company like yours navigated that, and especially from a sort of supply chain point of view? Well, what we do really were an exploration company, although I've been in mining and exploration for many decades now, it's good for us because we can get out in drill. We do have a high grade copper or body up in Montana that we've been drilling on for a couple of years. We've had relatively good success. Copper is drilling intensive, more than just about any other type of project. You have to put the holes into define what you have. No AI or anything like that's going to completely replace what we do in the field. So if you look at ours, for example, and I believe it's going to be a good porphyry system, which is responsible for most of the copper production in the world, we're in a good place right now. But if you just step away from us and we won't mind it, you're going to see that it's going to take a company quite a long time to put that into production. And once they do, they're going to wind up with raw ore and know where to send it. And generally from an exploration point of view, what is the outlook from an North American perspective or even a global perspective? Exploration right now, if you just judge by how many drill rigs are out, how many of your friends are out working, we're all busy. We're all very busy. So we could actually take some more workers out there doing it. There's a lot of jobs. There's a lot of stability right now. And it's exceeding what we actually can do, whatever the equipment or we just don't have the personnel and we don't have all of the equipment. So that's a good sign. It just means you make more drill rigs using copper, of course. And you train more people to do what you're doing. So it's been a very exciting time for exploration, but almost overwhelming, I should say, because it hits happening so quickly that budgets and anything that you do in three or four months prior to what you're doing to today, they don't hold any water. The prices of everything are going up, the prices of services of equipment, is somewhat exceeding the budgets of some smaller exploration companies. You're not only looking copper, you look at gold and various other mining, millilocks and rare arts. So what are some of the other exciting developments we're seeing in the mining sector? From a mining standpoint, a technological standpoint, mining hasn't really changed a whole lot in its approach in the last 100 years. Now we've replaced mules and pickaxes and things with big shovels. But we operate on a relatively primitive scale. We evolve very slowly because we don't need the capital expense of buying a new shovel herb. What's happening now is that the technology is increasing so quickly, is how we can mine, how efficiently we can mine, that we have to keep up with that. What that's going to result in is a much bigger profit margin for the companies that are willing to spend the upfront capital. So your equipment's going to be better. You're going to automate things, which is happening right now, and is very efficient, because you take the human element out of it a bit, and you put a machine underground where it can't be injured, it can't be off, it doesn't require any benefits or overhead. It's just a maintenance. That's evolving very quickly. Faster than some companies can keep up with it. So that's what I see in the future is much more efficient mining, much more profitable mining, but that's five years or so in the future. So Eric, obviously you mentioned that the huge permitting times is one of the big issues in developing these projects and resources. You as a company would like to see, but what are the easy wins that we can see in the permitting side? That's a good question. The mining is tough enough just finding a deposit and then establishing the economic viability of it. The things we have to really focus on are the things that are within human control. We did not put the ore body there. We did not decide that it was economic. That was due to drilling. Permitting and people getting in the way of each other, is a human element. And the human elements are things we can change as human beings. And then certainly we need to streamline our ability to get these minds into production. Now that's all for this episode. Thank you all for listening. It will be really fascinating to see how copper prices fare in the coming weeks and months. I'm sure we'll have even more episodes on copper and all the other minerals and metals that are part of the energy transition. Now I'd like to give a quick shout out to the Energy Evolution podcast team, including Dan Tester, Andrew Englum, Camilla Nashett, Karen Villainbrett, and a big thank you to our agency partner, the 199, and the S&P Global Energy Digital Content Team. Also, don't forget to subscribe to Energy Evolution on your favorite podcast platform. And if you have any ideas for future podcasts or topics or guests, please email us at
[email protected]. Until next time, thank you for listening. [MUSIC]
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