The AI Boom's Hidden Fuel: Why Copper Supply Is the Next Big Crisis
LOS ANGELES—Last September, billionaire mining executive Robert Friedland delivered a stark warning at the USC Marshall Energy Business Summit: the world is hurtling toward a copper supply crisis that could derail the artificial intelligence revolution and the global transition to green energy.
Friedland outlined how soaring demand from data centers, electric vehicles, renewable power infrastructure, and grid upgrades is colliding with a market that is fundamentally smaller and less liquid than oil. "We're talking about a material that is the circulatory system of the modern economy," he said, emphasizing copper's role in everything from underwater power cables to advanced military tech.
The numbers are staggering. Humanity has mined roughly 700 million metric tons of copper over 10,000 years, with about 80% still in use. Annual consumption now hits 30 million tons, yet only 4 million tons come from recycling. To sustain modest global GDP growth alone—before adding new electrification demands—the world would need to mine the equivalent of all historical production in just the next 18 years.
Compounding the problem, ore grades are in steep decline. Producing a ton of copper today requires about 16 times more energy and twice the water than it did in 1900. In Chile, which supplies nearly a quarter of the world's copper, energy costs and storage challenges persist despite a growing renewable mix.
Friedland warned that avoiding a "train wreck" would require bringing six new tier-one mines online every year until 2050—a near-impossible feat. He labeled much of the current AI and green energy optimism "fantasy" without the foundational metals and energy to build it.
In this strained landscape, two mining giants are positioned to capitalize.
Southern Copper (NYSE:SCCO), coming off record 2025 sales of $13.42 billion, is navigating lower ore grades in Peru but is bolstered by a looming global deficit. Analysts project 2026 revenues of $16 billion, with earnings per share reaching $7.31. The key to its future is the Tia Maria project in Peru, now 24% complete and targeting first production in 2027. Once fully operational, it's expected to add 120,000 tons of annual output.
Freeport-McMoRan (NYSE:FCX), the world's largest publicly traded copper producer, is rebounding from a temporary setback at its Grasberg mine. The company posted a strong Q4, with earnings beating estimates by a wide margin. For 2026, it forecasts sales of 3.4 billion pounds of copper and is earmarking up to $4.5 billion in capital expenditures to expand capacity, anticipating robust demand through 2028.
Consensus estimates see Freeport earning $2.66 per share on $28.6 billion in revenue next year, heavily leveraged to rising prices as data center demand for copper is projected to hit 475,000 tons.
### Voices from the Market
"This isn't just a commodity story; it's an infrastructure imperative," says David Chen, a portfolio manager at Horizon Capital. "Copper is the new oil, and the companies with secure reserves and expansion pipelines will define the next decade of tech and energy."
"Friedland is right to sound the alarm, but let's not pretend this is unforeseen," argues Maya Rodriguez, a senior analyst at GreenRock Advisors. "Years of underinvestment in mining exploration, coupled with paralyzing permitting processes, created this bottleneck. Calling it a 'fantasy' is dramatic, but the market signals are very real."
Striking a more critical tone, Leo Strauss, an independent resource sector consultant, commented: "It's rich hearing a mining billionaire blame 'hype' for a crisis his industry helped create. Where was the strategic investment a decade ago? Now we get doom prophecies alongside profit projections. It's a convenient narrative to justify soaring prices and windfall profits for a few players."
"The data center angle is what's new," observes Priya Sharma, a technology infrastructure researcher at MIT. "Each AI server rack needs significantly more copper wiring and cooling than traditional setups. When you scale that to the thousands of new data centers planned globally, the demand shock becomes clear. This directly links your ChatGPT query to a mine in Peru."
For investors, the message is clear: the race to power AI and electrify the economy will be won or lost in the world's copper mines.