BHP warns Australian mining not ready for low-cost competitors
The boom in demand from China’s industrialization is now “past the period of aggressive growth,” BHP’s Australia President said.
BHP (ASX, LON, NYSE: BHP), the world’s largest miner, has sounded alarm bells on the growing global adoption of artificial intelligence (AI) in all fields, not out of fear for the future of humanity, but as the technology requires more energy-intensive computing, which would boost global copper demand.
The growth of data centres and AI solutions could boost global copper demand by 3.4 million tonnes a year by 2050, BHP’s chief financial officer Vandita Pant said this week.
“Today, data centres are less than 1% of copper demand, but that is expected to be 6% to 7% by 2050,” she told the Financial Times. “There is a lot of copper in data centres.”
BMO Capital Markets commodities analyst Colin Hamilton says that data centres themselves are becoming incrementally less copper intensive. “But getting the electricity to them, that is copper intensive,” he warns.
BHP expects global copper demand to rise to 52.5 million tonnes per year by 2050, up from 30.4 million tonnes in 2021—a 72% increase.
The long-predicted copper shortage has sparked a race to secure access to the metal, highlighted by BHP’s buy of Oz Minerals, its largest acquisition in a decade and its failed $49 billion bid for smaller rival Anglo American (LON: AAL) in May.
BHP’s main interest in targeting Anglo was its copper mines. An electrified world has become increasingly dependent on battery metals, particularly on copper, and BHP was, not surprisingly, eager to secure a leading position in this market.
A tie-up would have given the mining giant about 10% of global copper production at a time when copper prices are hitting record-highs. They have climbed about 23% so far this year.
A successful deal not only would have reshaped the mining industry, but would have also boosted BHP’s presence in the world’s top copper producing countries, Chile and Peru. This would have made it the world’s largest producer of the metal, far surpassing Codelco.
The mining giant wasn’t phased by the unsuccessful takeover of Anglo. In July, BHP teamed up with Canada’s Lundin Mining (TSX: LUN) to acquire South America-focused Filo Corp. (TSX: FIL), in a $3 billion deal that handed them key copper assets in Chile and Argentina.
Global copper inventory has been falling in recent years, with those in CME warehouses tumbling 71% since late March to 8,947 tonnes in July this year, the lowest since 2008.
New mines are not being developed quickly enough to offset the increasing need for copper— it typically takes 15 years to bring a project into production.
