Diversified commodities major BHP has warned that the world will need $250-billion in investment over the next decade to bridge the growing gap between copper supply and surging demand.

As the global transition towards electrification and decarbonisation accelerates, copper demand is projected to rise sharply, with the miner projecting a 70% increase by 2050.

BHP chief commercial officer Rag Udd has highlighted the scale of this challenge, stating that copper supply will need to expand by an additional ten-million tonnes a year over the next decade to meet rising consumption.

“To bridge this gap, we estimate the cumulative cost to be a quarter of a trillion dollars. This is a formidable challenge that will require significantly more investment globally than what we have seen over the previous decade,” says Udd, reflecting on the findings of BHP’s latest copper report.

In ‘BHP Insights: How Copper Will Shape our Future’, the company forecasts that copper demand will reach more than 50-million tonnes a year by 2050, with an average growth rate of 2% a year.

The period leading up to 2035 will see a compound annual growth rate (CAGR) of 2.5% – up from a 1.9% CAGR in the past 15 years. In absolute terms, this translates to an additional one-million tonnes of copper demand, every year, until 2035 – double the 0.5-million-tonne-a-year growth volume of the past 15 years.

The growth will not only come from advanced economies, but also from emerging markets. Unlike the staggered adoption of cars, electricity and consumer electronics across different regions in the twentieth century, the twenty-first century will be marked by the concurrent adoption of copper- intensive technologies – such as electric vehicles, renewables and data centres – in high-, middle- and lower-income economies.

However, mounting demand presents supply challenges. BHP acknowledges that while global copper production has doubled over the past 30 years to reach about 22-million tonnes a year, mainly owing to expansion in Latin America, the Asia-Pacific region and Africa, replicating this supply growth will be much harder. The industry has to achieve similar supply growth in less than half the time.

Despite optimistic forecasts for new projects, BHP notes a significant gap between expected supply and future demand, even when accounting for a positive outlook on copper scrap recovery.

Many existing copper mines are ageing and their output is expected to decline by around 15% by 2035. These mature mines will require substantial capital investment to maintain production levels, with upgrades to infrastructure becoming increasingly necessary.

Adding to the pressure is the ongoing decline of ore grades, which have fallen by about 40% since 1991. While advances in processing technologies have helped offset some of the impact, the trend highlights the need for reinvestment across the sector to sustain supply.

BHP warns that there are fewer “easy” projects available to replace dwindling supply. The projects that are available face escalating challenges, from regulatory hurdles to higher costs, which will inevitably affect the price of copper.

The company predicts that future supply will likely be sourced from either lower-grade brownfield expansions in well-established jurisdictions or higher-grade greenfield projects in riskier, emerging markets. Neither option, however, will come cheaply or quickly, BHP warns.