Trafigura Sees AI Driving Up Copper Demand by 1 Million Tons by 2030

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Trafigura, one of the world’s leading commodity traders, presented insights on the evolving landscape of global markets and the increasing copper demand during the Financial Times Commodities Global Summit in Lausanne.

Chief Economist Saad Rahim highlighted the resilience of economic growth across various regions. He noted that beyond the dominance of the United States, there are signs of recovery in European industrial demand, and China is performing better than anticipated. Rahim pointed out that market indicators, such as oil prices hovering around USD 90 per barrel and copper prices nearing USD 9,500 per ton, reflect robust global growth.

Regarding the commodity requirements of the energy transition, Rahim emphasized a looming deficit of 4 to 5 million tonnes of copper by the end of the decade. He attributed this shortfall not only to the electrification of transportation but also to the increasing demand from emerging sectors such as data centers and artificial intelligence (AI).

Rahim stated, “On top of the energy transition, we are adding more sources of demand. Power demand from data centers and artificial intelligence is something that analysts have not factored into their forecasts. That could potentially add a further 1 million tonnes of copper demand.”

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Richard Holtum, Global Head of Gas, Power, and Renewables at Trafigura, echoed Rahim’s sentiments regarding the impact of AI on power markets. Holtum highlighted the substantial power requirements of AI, stating that “a ChatGPT query uses 9 times more power than a Google search.” He emphasized that as AI adoption increases, the demand for electricity will surge, necessitating significant investments in power infrastructure, including copper-intensive grids.

Holtum underscored the importance of natural gas and nuclear power in meeting the rising electricity demand, emphasizing their role as cleaner alternatives to coal. He emphasized, “We will also require huge amounts of copper so that the grid is able to sustain this extra power demand.”

Furthermore, Holtum outlined the implications of AI for the commodity trading industry. He noted that AI would enhance back-office efficiency and enable traders to make better decisions, thereby revolutionizing trading practices.

In conclusion, Trafigura’s insights shed light on the intricate relationship between economic growth, the energy transition, and the increasing copper demand driven by emerging technologies like AI. As the world navigates towards a sustainable future, the role of copper in facilitating this transition becomes increasingly indispensable.