Copper is a metal in high demand due to the energy transition towards net zero and the expanding computing resources for AI workloads.
Inputs that matter: In 2024, copper equities experienced a significant upturn, primarily driven by a series of market dynamics that include:
- Bloomberg reports that the closure of a massive mine operation in the Panamanian jungle is among the key reasons why the world is short on copper.
- In March, Chinese smelters reduced output amid a concentrate shortage, leading to another price increase.
The opportunity: Beyond immediate market mechanics, copper's role in powering AI technology and supporting green energy transitions underscores its long-term value.
- Copper has the highest electrical conductivity rating of all non-precious metals.
Zoom in: "Tight copper mine supply is increasingly constraining refined production: the much-discussed lack of mine projects is finally starting to bite," Bank of America wrote last week in a note announcing that the "copper supply crisis is here."
- The metal ore's spot price has climbed more than 11% this year, reaching a high not seen in over a year.
Between the lines: AI use is surging astronomically around the globe, requiring vastly more energy to make AI-supported semiconductor chips and causing a gigantic explosion in data center construction.
- Sam Altman, CEO of OpenAI, warns that AI is creating a "catastrophic energy crisis."
- ChatGPT alone uses half a million kilowatt-hours per day.
- Data centers and chip manufacturing facilities, which are already sucking up water and energy at unsustainable rates, are about to multiply across the world due mainly to AI, likely triggering energy and water wars between corporations and communities.
- However, a more significant concern is the water usage required for these data centers.
Follow the money: AI data centers and power plants require massive amounts of water for cooling.
- Training an AI at the computing level of a human brain for one year requires over 33,000 gallons of water.
- Water use in data centers is grossly underestimated—for example, Microsoft's Dutch data center consumed four times its initial plans.
- For example, "Taiwan, responsible for 90 per cent of the world’s advanced semiconductor chip production, has resorted to cloud seeding, water desalination, interbasin water transfers and halting irrigation for 180,000 hectares to address its water needs."
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Read More
- https://carboncredits.com/copper-price-breakout-and-big-role-in-carbon-emission-reduction-and-net-zero/
- https://www.mining.com/spectacular-copper-price-rally-only-gaining-momentum/
- https://markets.businessinsider.com/news/commodities/copper-commodity-price-rally-outlook-metal-green-industry-first-quantum-2024-4
- https://www.barrons.com/articles/ai-chips-electricity-usage-2f92b0f3
- https://news.mongabay.com/2024/03/critics-fear-catastrophic-energy-crisis-as-ai-is-outsourced-to-latin-america/
- https://theconversation.com/ais-excessive-water-consumption-threatens-to-drown-out-its-environmental-contributions-225854
- https://banananomics.co/nuclear_fusion_and_the_ai%20_energy_crunch