Explainer: Why Copper Is A 'Gold Mine' For India's Road To AI

Open AI's ChatGPT, Google's Gemini, Microsoft's Bard and potential layoffs being driven by AI integration, are some of the many subjects that have been dominating the headlines lately. The massive buzz going around AI has placed everyone in a race wherein no one wants to get left behind.

Going beyond the AI buzz, there is something that needs focus today for the digital future and that is the demand for copper. There is no denying the fact that there will be a huge shift during the AI play. This shift, itself, will push an enormous demand pressure on economies for copper.

Why Copper is the new gold for AI?

Initially, precious metals were once seen as key components in chips, which are essential for AI technology. However, as the widespread adoption of AI gains stronger traction, copper has emerged as an even more essential ingredient. The metal is used for connecting different parts of integrated circuits (IC).

Trafigura, a commodity trading entity, has projected a spike in copper demand, potentially reaching one million metric tons by 2030. Yet, there's a growing concern about worsening supply shortages in the coming years. Adding to the worries is the current situation of global copper prices hovering near a 15-month peak, driven by constrained supplies and a resurgence in manufacturing activity.

Which countries have the highest production of Copper?

Chile is the world's largest producer of copper, closely followed by Peru and China. Along with the Dragon Nation, USA is among the top five copper-producing nations. However, India doesn't even make it into the top 10 list, despite its growing industrial presence.

India's copper story took a turn from being a net exporter in FY18 to becoming a net importer in FY19. However, there's a chance that the tables might turn as many expect that the country might see a drop in copper imports.

For instance, earlier this year, Adani Group announced that it is in the process of constructing a single-location copper manufacturing plant in Mundra, Gujarat.

Is AI the only sector that gets an edge

Not Actually. India's sunrise sector also relies heavily on this metal. The rise of industries such as electric vehicles (EVs) and renewable energy is set to boost the demand for the 'red metal.'

According to a report by McKinsey & Company, the global copper demand will surge to 36.6 million metric tons by 2031. The push for decarbonization across economies is one of the many factors behind this massive figure. Every country has its sights set on achieving net zero emissions by 2050. This might just prove the fact that Copper is infact a 'gold mine' for the road ahead.