AI Boom and Geopolitical Tensions Threaten Global Metals Supply, Wood Mackenzie Warns
By edisonreed // 2026-10-24
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Geopolitical disruptions and surging electricity demand from artificial intelligence are putting global metals supplies under growing pressure as mining investment struggles to keep pace, energy consultancy Wood Mackenzie said in a report published in October. The consultancy is tracking more than 250 GW of data center projects worldwide, more than triple the pipeline a year earlier, and it forecasts that AI-related electricity consumption will increase fivefold between 2025 and 2030 and exceed 1,000 TWh by 2035 [1][2][3]. According to the report, the transmission lines, substations and dedicated power generation required to serve those facilities could need three to four times more metal than the data centers they support [2][4]. The report states that geopolitical disruptions, resource nationalism and an escalating power crunch are reshaping global base metals markets, and that demand for power infrastructure is accelerating competition for copper, aluminum and other strategic materials [5][6]. Mining investment is lagging as grid expansion, trade disruptions and resource nationalism strain supply, the consultancy warned [1].

Copper Faces Record Prices and Tight Supply Outside US

Copper prices have reached a record $14,759 per tonne as US stockpiling and trade policies distort global inventories, Wood Mackenzie said. Domestic stocks provide more than 170 days of cover compared with 48 days elsewhere, according to the report. Markets outside the US face a refined copper deficit of about 450,000 tonnes, the report stated. The consultancy forecasts Chilean mine production will fall 5.2% in 2026, while global output should expand by more than 5% in 2027 after three years of stagnant growth. Wood Mackenzie estimates miners must bring about 850,000 tonnes of new greenfield copper production online annually over the next decade, a target the report describes as demanding given development timelines and rising project costs. The pressure extends beyond the consultancy's projections. Rick Rule, a veteran natural resource investor, said in an interview with Epoch TV's "Market Insider" that the AI boom is driving a surge in copper demand that will lead to an unavoidable supply deficit within five years [7]. Copper futures climbed to approximately $6.90 per pound on Thursday, reaching a record high before retreating by the end of the session, according to a CNBC report cited by NaturalNews.com [8].

Aluminum and Nickel Outlooks Diverge

Attacks damaged two major Middle Eastern aluminum smelters, removing almost 2% of global primary production and contributing to a projected 1-million-tonne deficit in 2026, according to Wood Mackenzie. Higher prices have encouraged restarts, including in China, where operating rates reached 99%, and Indonesian production is expanding toward 3 million tonnes by 2030. Wood Mackenzie expects aluminum to return to surplus in 2027, although it said underlying market conditions remain supportive and identified faster Indonesian expansion and weaker economic growth as principal downside risks. Global refined nickel production is forecast to contract 2% in 2026, its first annual decline since 2015, the report said. Indonesian mining quotas, declining ore grades and drought-related disruptions are tightening Class II supplies, while Chinese stainless steel producers are increasing scrap and Class I cathode use. Class I nickel and chemical markets continue to face surpluses as Indonesian high-pressure acid leach projects and Chinese refining capacity expand, and Wood Mackenzie forecasts nickel prices recovering toward $19,000 per tonne by 2030, with Indonesian policies and sulfur availability listed as uncertainties. The diverging outlooks reflect a broader pattern in base metals, where supply shocks and policy decisions in individual producer countries are producing sharply different price trajectories. The report places resource nationalism among the forces reshaping these markets alongside geopolitical disruptions and the power crunch [5][6].

Battery Demand Shifts Toward LFP and Sodium-Ion

Wood Mackenzie expects lithium iron phosphate chemistry to dominate mass-market batteries through 2030, supported by Chinese manufacturing expansion and faster charging technology. CATL's third-generation Shenxing battery targets charging from 10% to 80% in less than four minutes. CATL secured a three-year, 60 GWh sodium-ion supply agreement with HiTHIUM Energy Storage in April, and Wood Mackenzie expects sodium-ion battery modules to reach cost parity with LFP by 2035 while solid-state battery mass production could begin around 2030. Lithium carbonate prices have rebounded about 130% from their mid-2025 lows, but raw lithium accounts for only 2% to 3% of the cost of a typical 100 MW, four-hour turnkey storage project, according to the report. An 83% increase in lithium prices during the first quarter of 2026 translated into an approximately 10% increase in complete storage system costs. The chemistry shift comes as battery demand is increasingly tied to grid storage and data center backup power as well as electric vehicles. Wood Mackenzie's analysis places battery materials within the same supply chain that is being strained by AI-related electricity consumption, which it forecasts will rise fivefold between 2025 and 2030 [1][2].

Financing and Grid Constraints Limit Supply Response

The lithium industry attracted $60 billion over the past decade, helping increase refined chemical supply tenfold, and Wood Mackenzie estimates another $150 billion to $250 billion will be needed through the 2050s. Chinese developers can build production capacity more efficiently than Western competitors, complicating efforts by governments outside China to establish independent battery supply chains, the report said. In Japan, data centers can be completed in less than five years while grid upgrades can take more than a decade, according to Wood Mackenzie. Developers are increasingly considering microgrids and off-grid generation despite costs two to three times higher than grid-connected electricity. The consultancy's broader power research reaches a similar conclusion, finding that the AI boom is accelerating a reallocation of capital across generation, grids, storage and manufacturing, with outcomes depending on where power can actually be delivered and how regulations allocate costs [9].

References

  1. AI boom could overwhelm metals supply: WoodMac. https://www.mining.com/ai-boom-could-overwhelm-metals-supply-woodmac/
  2. Data Centers Race Ahead, Metals Supply Lags: WoodMac Sees AI Power Demand Rising Fivefold by 2030. https://nai500.com/blog/2026/10/data-centers-race-ahead-metals-supply-lags-woodmac-sees-ai-power-demand-rising-fivefold-by-2030/
  3. AI boom could overwhelm metals supply: WoodMac. https://www.newsbreak.com/news/4960744939975-ai-boom-could-overwhelm-metals-supply-woodmac
  4. AI-Driven Power Demand Could Overwhelm Global Metals Supply, Wood Mackenzie Warns. https://tzp.news/en/news/2026-10-22-woodmac-yapay-zeka-kaynakli-elektrik-talebi-metal-arzini-zorluyor/
  5. Wood Mackenzie: Geopolitical supply shocks and AI power crunch collide across global base metals. https://markets.businessinsider.com/news/stocks/wood-mackenzie-geopolitical-supply-shocks-and-ai-power-crunch-collide-across-global-base-metals-1036653879
  6. Wood Mackenzie: Geopolitical supply shocks and AI power crunch collide across global base metals. https://www.woodmac.com/press-releases/wood-mackenzie-geopolitical-supply-shocks-and-ai-power-crunch-collide-across-global-base-metals/
  7. Expert Warns: Copper Demand Surges, With Supply Deficit Expected - NaturalNews.com, July 03, 2026.
  8. Copper Hits Record High, Analysts Cite Supply Constraints Over Growth - NaturalNews.com, August 07, 2026.
  9. AI is reshaping the power investment landscape. https://www.woodmac.com/news/opinion/ai-is-reshaping-the-power-investment-landscape/

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