Global Copper Shortage Looms as AI and Green Energy Demand Soars

The world is heading toward a significant copper shortage, driven by explosive growth in artificial intelligence infrastructure and the global shift to green energy. This warning comes from India’s Economic Survey 2025-26, a key government document that analyzes the nation’s economic prospects. The report highlights a perfect storm of soaring demand and constrained supply that threatens to reshape global markets and inflation trends for years to come.

The Dual Engines of Copper Demand

Two powerful trends are pushing copper consumption to new heights. The first is the rapid expansion of AI data centers. These facilities are the physical backbone of the AI revolution, requiring immense amounts of copper for power cables, cooling systems, and electrical components. As companies worldwide race to build more computing power, their hunger for the red metal intensifies.

The second major driver is the global transition to renewable energy and electric vehicles. Copper is a critical material in this shift. Electric vehicles use about four times more copper than traditional gasoline cars. Solar panels, wind turbines, and the expanded power grids needed to support them all rely heavily on copper for efficient electricity transmission.

Supply Struggles to Keep Pace

While demand surges, the supply of copper is facing severe challenges. The Economic Survey points to major mine outages and operational disruptions in key producing countries like Chile and Peru. Developing new mines is a slow and capital-intensive process, often taking more than a decade from discovery to production.

Adding to the pressure are rising trade barriers and geopolitical tensions that can disrupt the smooth flow of metals across borders. These factors combine to create a tight market where supply simply cannot ramp up quickly enough to meet the accelerating demand.

Implications for Markets and Inflation

The likely result of this imbalance is that copper prices will remain elevated and volatile. Copper is often called “Dr. Copper” because its price is seen as a reliable indicator of global economic health. Sustained high prices will have wide-reaching effects.

For global markets, it means increased costs for key industries like construction, electronics, and automotive manufacturing. This could feed into broader inflation trends, complicating central banks’ efforts to control price rises. The report suggests that the copper crunch will be a defining feature of the commodity landscape in the coming years.

India’s Position and Path Forward

The Economic Survey specifically examines India’s resilience in the face of this potential crisis. As a major developing economy with its own ambitious goals for digital infrastructure and renewable energy, India is both a significant consumer and a potential player in the copper market.

The country’s ability to secure stable copper supplies, promote recycling, and explore domestic resources will be tested. How India navigates this shortage could impact its economic growth, manufacturing costs, and the pace of its own green energy transition. The coming copper squeeze is more than a metals market story; it is a fundamental challenge for the future of technology and sustainable growth worldwide.