Copper Crunch & EV Boom

Copper Crunch & EV Boom

Context

As of early 2026, the global shift toward Electric Vehicles (EVs) and AI data centers has triggered a structural copper shortage. Copper is now being framed as a "strategic asset" essential for the 21st-century energy transition, with prices reaching record highs of approximately $13,000–$15,000 per tonne.

About the News

• Market Imbalance: Global copper demand is projected to reach 28 million tonnes in 2026, while supply is struggling to keep pace due to a decade of underinvestment.
• The AI Factor: Beyond EVs, the rapid expansion of AI and GPU clusters has emerged as a new primary consumption category, requiring massive amounts of copper for high-capacity electrical feeds and cooling systems.
• Record Prices: Copper prices have seen a 36% year-over-year appreciation as of January 2026, driven by critically low inventories in global storage hubs.

The Demand Surge: EV Intensity

• 
  Key EV Components: Copper is indispensable for battery anode collectors, traction motor windings (coils), high-voltage cabling, and charging infrastructure (each fast charger adds ~8 kg).

Supply Chain & Geopolitical Challenges

• The "Copper Cliff": New mining projects take an average of 17 years from discovery to production. Declining ore grades in established mines (Chile, Peru) further constrain output.
• Geopolitical Power Struggles:
  • US SECURE Act (2026): New bipartisan legislation in the US aims to create a $2.5 billion strategic mineral reserve to counter China’s dominance in processing (China controls ~90% of global rare earth processing and ~40% of copper smelting).
  • Western Price Alliances: The G7 and partners (including India and Australia) are discussing "price floors" to incentivize non-Chinese mining projects and insulate supply chains from economic coercion.
• China's Pivot: Beijing is shifting its 15th Five-Year Plan focus from infrastructure-led growth to consumer-driven green technology, maintaining its position as the largest driver of copper demand.

Key Geography & Indian Scenario

• Global Leaders: Chile (27%), Peru, Congo, and China.
• India’s Position: India is roughly 56% self-sufficient in refined copper.
  • Jharkhand: Successful restart of the Kendadih Copper Mine (Jan 15, 2026) and modernization of the Surda Mines to meet green energy demand.
  • Madhya Pradesh: Malanjkhand (Balaghat) remains the largest open-cast copper mine in India.
  • Rajasthan: Khetri Copper Complex (Jhunjhunu) continues as a major production hub.
  • Policy Shift: The Ministry of Mines is expanding capacity from 4 Mtpa to 12.2 Mtpa by 2029 to reduce import dependence.

Way Forward

• Urban Mining: Accelerating Non-Ferrous Metal Scrap Recycling to recover copper from old electronics and infrastructure.
• Material Substitution: High copper prices (4.5:1 ratio vs. Aluminium) are forcing some industries to switch to aluminium for wiring where weight and space permit.
• Strategic Stockpiling: Developing national reserves of critical minerals to buffer against price volatility and supply shocks.
• Technological Innovation: Investing in deep-sea mining and satellite-based environmental monitoring to unlock new deposits sustainably.

Conclusion

Copper has transitioned from a cyclical industrial commodity to the "great enabler" of the green and digital era. Without a massive increase in mining investment and global cooperation on supply chains, the "Copper Crunch" risks becoming a significant bottleneck for global decarbonization goals.