‘The world needs to invest in copper’: Anil Agarwal warns of rising supply crunch as AI demand surges

Vedanta Group Chairman Anil Agarwal has warned that the world faces a structural copper shortage over the next five to 10 years as demand rises from artificial intelligence (AI), data centres and electrification, even as supply struggles to keep pace. He said India, which imports 95% of its copper, needs policy changes to unlock domestic exploration and production.

In a post on X, Agarwal compared copper's demand outlook with oil, arguing that while geopolitical events can disrupt oil supplies, copper faces a more fundamental supply constraint.

"In terms of demand, yes. There will be an exponential rise with the spread of AI, data centres and aggressive electrification. In terms of supply, it may be different. The world has enough supply of oil. This can be disrupted by geopolitical events but fundamentally there is no global shortage. In copper, there is going to be a structural shortage which will keep rising over the next 5 to 10 years. The world needs to invest in copper. India has a big challenge because we import 95% of our copper. We also have a massive opportunity because we haven't even begun to explore our potential. With appropriate changes in policy, our youngsters can get into exploration. It is not costly and hugely rewarding. And our existing assets can produce 10 times. Especially if the accountability is to public shareholders at large."

AI demand and supply disruptions

Copper has gained attention as a critical metal for the energy transition, electric vehicles, power infrastructure and AI-driven data centre expansion. However, concerns about whether technology companies can sustain their spending on AI infrastructure have recently weighed on investor sentiment.

According to a Bloomberg News report, copper prices have fluctuated as traders assessed the risks of overheated AI investment alongside persistent supply constraints. Technology and AI stocks fell across global markets following warnings about the growing difficulty of financing data centre expansion.

Despite these concerns, copper has rallied 18% this year, with the threat of US import tariffs emerging as a major driver. The prospect of tariffs has encouraged large volumes of copper to flow into the US, tightening availability in other markets.

Supply disruptions at major mines have added to the pressure. On Tuesday, the London Metal Exchange's cash copper price traded at a premium of around $132 a tonne over three-month futures, a market condition known as backwardation that typically signals tight near-term supply.

In China, the Yangshan copper import premium, an indicator of demand, reached its highest level since 2022 last week.

India faces challenge and opportunity

Analysts expect AI-related demand to remain an important influence on copper market sentiment. BMI, a Fitch Solutions company, said in a note: “While not acting as the sole rationale behind the copper price performance in 2026 thus far, AI-driven sentiment is expected to continue to shape, if not dominate, the narrative in the coming years.”

For India, Agarwal's remarks highlight the need to strengthen domestic exploration and production to reduce import dependence. Expanding existing assets and encouraging exploration could help the country meet rising demand as electrification and digital infrastructure investment accelerate.