AI Runs on Red Gold–And it’s Limited. Everyone knows AI is a software story. It’s physical backbone is a 19th-century metal. Red Gold (industry slang) is copper and it is trading like a precious metal.
AI Runs on Red Gold
Those new data centers are the new “workhorses” of power. Here is a facility that has high-density GPU racks, instant power draws and liquid cooling. These Graphics Processing Units do math calculations in parallel sequence computations using copper that results in instant power (plus cooling) and produces heat.
Nola’s Note–Could we recycle that heat somewhere else?
How much copper you ask? Your conventional data centers uses 5,000-15,000 tons of copper! The hyperscale AI facility can require up to 50,000 tons! Do we have that amount on hand? No and JP Morgan estimates that AI data centers alone will add about 110,000 tons of incremental copper DEMAND in 2026.
AI Growth Driving the Demand for Copper
This is a world-wide happening. Copper needs started in 2025 with $306B (1) and will grow to $434.42B in 2026. Mordor gives us the compilation with real numbers from all world countries, with Asia-Pacific as the fastest-growing region at a 40.75 percent Compound Annual Growth Rate.
Companies that used the AI explosion saw 34 percent productivity growth compared from 2018 to 2025. The top 20 percent companies saw their growth from that seven-year time hit 163 percent. And the newest fastest-growing job title in the US is – AI Engineer! There is a 143 percent increase in posting year-over-year and AI skill jobs are growing 8x faster than the overall market. Oh, yes, the wage premium has also grown to a 62 percent wage increase. Growth is happening overall.
The Geopolitical Layer between the US and China
Earlier, I asked if the US had that much copper on hand and the answer was “No.” China has 7-8 percent of the global copper. They produced 1.8 million metric tons of copper in 2024 of the global total of 23 million metric tons in 2024. (2) Our US production is only 5 percent that same year of copper world production and our domestic copper production is concentrated in Arizona.
The reason the US is behind in filling our need is refining the ore. The US launched “Project Vault” to start stockpiling critical-minerals in February 2026. It’s a $12B effort to cover the US expansion and growth needs.
Supply and Demand in Marketing
The data centers that exist in the US in March 2026 are 4,011. We have 84 dedicated AI data center facilities, but barely over 50 percent are already operational. The planning/construction/site-selection is in the haggling phase. Power and water needs in Texas, Virginia and Georgia are the issues. (3)
Demand is projected to rise 50 percent to 42 million metric tons by 2040. Our production peaks in 2039 at 33 million metric tons, a 10-million-ton gap need for copper. (5) The other half of the problem is the ore-grade deficiency. It was at the 1 to 2 percent grade level, but is now below 0.7 percent. This forces miners to process more rock for the same results. (6)
US Mines “Ready” for Production
Very few US mines are actually to the point of production. Permitting is the problem. There is a mine in Michigan’s Upper Peninsula, fully permitted and construction-ready in early 2026. Production? 2-3 years hence. Another in Alaska expects to finish the permits in early 2026 also and plans on their first shipment by 2027. Arizona is actively producing at this time.
The federal government has tried to speed up the timeline and added 10 more mining projects to a fast-track permit list in 2025. The total of 27-project pipeline mines is still years from completion and shipping the ore. Specifically, it takes new mines 17-25 years from discovery to production. (7) That is the short supply problem in a nutshell.
Short Supply Has a Price Spike
Most of us know that if something is in short supply, you will either experience a price spike or a decrease in availability. This equals some precious metals prices. Copper price per pound flucuated from Jan. 2026 at $6.50/lb. and a low of $5.64/lb. on April 2, 2026, but ran back up to $6.72 (May, 2026) and returned to $6.35/lb. in July, 2026. (8) It’s a supply and demand business.
Those who Recycle
Part of those in my unique area also recycle many things. High prices for copper have these people scrambling to discover a way to increase their money by recycling copper. This helps the local economy and also the recycling yard to move the copper from their location up the chain of production. When I go to declutter my storage units, I will also look for anything copper. Maybe I will find “I had red gold and didn’t know it.”
Copper as a Magnet for Crime
Here’s a statistic that should frighten you. AT&T averaged 200 copper theft incidents per week in 2025 and it totaled about $82M in losses. The majority of them happened in Callifornia. And, the thieves can’t tell the difference between fiber and copper and destroy the fiber network, also.(4)
In Illinois, the McDonough Power Cooperative found thieves had stolen copper wire and it surfaced in a pawn shop. Plus, there is in Kentucky and Tennessee a “copper theft corridor” that is active. This increases the cost of expansion of the broardband buildout, because the repairmen have to spend their time on the service repairs.
AI’s Appetite for Copper
A January 15, 2026 executive order leans on international cooperation to secure mineral access and negotiators must report by July 13, 2026 or the President may impose tariffs or other import restrictions. An item called “price floors for critical minerals” was not pursued by the US. It was left as an unsettled policy.
It’s no lie that AI has an appetite for copper. Here’s what has happened between the State Department, the Commerce Department, Vice President JD Vance and several cabinet secretaries when they hosted a meeting.
It consisted of 54 countries, and the European Commission meeting on February 4, 2026. It was considered a “Forge” partnership with a title of Critical Minerals Ministerial. The US was able to sign eleven new bilateral critical minerals frameworks or agreements with other countries. There were 10 others signed in the previous five months.
A Memorandum of Understanding (formal document in writing laid out in an agreed framework or intent to cooperate on something, before a fully binding contract or treaty is worked out) was between Glencore-Orion and the Democratic Republic of the Congo promoting secure copper and cobalt flows to the US.
The Bottom Line
So, the US has some breathing room, while we try to get our mines in working order and producing and we find our AI engineers. We have also covered the AI’s need for copper. Perhaps as the copper shortage is mitigated, we also can have less theft and service interruptions on the local level.
Resources
(1) https://www.mordorintelligence.com/industry-reports/global-artificial-intelligence-market
(2) https://worldpopulationreview.com/country-rankings/copper-production-by-country
(3) https://aidatacenterindex.com/countries/united-states/
(4) https://www.lightreading.com/broadband/at-t-averaged-200-copper-theft-cases-per-week-in-2025
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