BHP’s Copper Consumption Projections

(Reuters) – Australian miner BHP projects that global copper consumption will increase by an average of 1 million metric tons per year until 2035, driven by the adoption of copper-intensive technologies. This growth is expected to be double the annual volume increase seen in the past 15 years.

Copper is traditionally utilized in the construction, transport, and power sectors due to its durability, malleability, and conductivity. In recent years, its applications have expanded to include electric vehicles, green energy plants, and data centres.

According to a report released by BHP on Monday, global copper demand has historically grown at a 3.1% compound annual growth rate (CAGR) over the past 75 years. However, this growth rate has slowed to only 1.9% over the last 15 years leading up to 2021.

BHP forecasts a recovery in this growth rate to 2.6% annually by 2035.

As of 2023, total copper demand stands at 31 million tons, comprising 25 million tons of copper cathode and 6 million tons of copper scrap. BHP operates Escondida, one of the world’s largest copper mines.

Looking towards 2050, BHP anticipates a 70% increase in global copper demand to 50 million tonnes annually, fueled by copper’s critical role in both existing and emerging technologies, as well as global decarbonization efforts.

BHP’s Chief Commercial Officer, Rag Udd, noted that the energy transition sector is expected to account for 23% of copper demand by 2050, up from 7% currently. Additionally, the digital sector, which includes data centres, 5G, artificial intelligence, internet of things, and blockchain, is projected to account for 6% of demand by 2050, rising from 1%.

Demand from China is set to grow, albeit at a slower rate, since its copper usage per capita is currently half that of developed countries. India is also expected to experience growth.

However, copper mining output growth faces challenges from high costs and declining ore grades, with BHP estimating that the average grade of copper mines has dropped by around 40% since 1991. They predict that between one-third and one-half of global copper supply will encounter grade decline and aging challenges in the next decade.

BHP estimates that the total expenditure on copper project expansions between 2025 and 2034 will reach about $250 billion, marking a significant increase from the approximate $150 billion spent in the preceding decade.