BHP set to become world’s largest copper producer as AI boosts recovery

With increasing demand from clean energy technology developers and the use of artificial intelligence (AI), the global copper mining industry is going through one of the most tumultuous periods in its lengthy history.

According to the Australian Department of Industry, Science and Resources’ (DISR) latest Resource and Energy Quarterly, AI is about to help BHP (ASX: BHP) significantly boost its annual copper production.

The report found that in 2023 there was increasing use of AI in copper extraction and refining processes, as producers looked to meet the robust demand projected for copper in coming decades.

At the world’s largest mine Escondida in Chile, BHP continues to explore ways to improve copper recovery, including a partnership announced with Microsoft in May last year that aims to use AI to optimise the mine’s initial processing circuit.

That increase has played a part in Bloomberg Intelligence’s forecast that BHP will overtake Codelco as the world’s largest copper producer this year.

AI a major influence

Meanwhile, Singapore-based multinational commodity trading company Trafigura has suggested the use of AI and data centres could add up to one million metric tons by 2030 and overcome future forecast supply issues.

Speaking at a conference in Switzerland, Trafigura chief economist Saad Rahim said the use of AI and data centres has exploded.

The use of AI has certainly paid off for Kobold Metals which in early 2024 announced the discovery of a significant copper deposit in Zambia.

Identified through the use of AI, the deposit has been compared to the significant Kamoa-Kakula project in the DRC, with Kobold hopeful it can begin operations toward the end of the 2020s.

EV demand impactful

According to the DISR study, electric vehicle (EV) demand is helping to make up for a fall in copper use in other areas.

The report forecasts that global mined and refined copper production will grow by 2.4% and 2.0% in 2024, respectively.

This growth will be driven by a combination of starts of new greenfield projects, a rise in production capacity and increasing EV uptake, with China’s EV boom expected to be a key driver.

The quarterly tipped China’s refined copper consumption to grow by 1.9% during the next few years, with transportation and clean energy manufacturing a key driver.

This will include continued growth in domestic purchases of EVs – with the Chinese Government last year announcing an extension of the tax-exemption on purchased EVs until 2027 – as well as the ongoing export of these vehicles to international markets.

Prices continue to surge

According to commodity analyst Daniel Hynes, copper traded near a 15-month high overnight of around US$9,417.50 per tonne as supply concerns and improved demand prospects boosted sentiment.

In his daily commodity wrap, Mr Hynes noted that prices are up more than 15% over the past two months as mine disruptions force the Chinese smelting industry to slow down.

In the US, analysts at leading banking firm Citi are suggesting copper is in the second bull market this century, with copper prices trending higher to average around US$10,000/t in the fourth quarter and around US$12,000/t by 2026.