- Coface expects copper, nickel and aluminium markets to tighten significantly by 2035 as electrification, renewable energy, grids, batteries and data centres increase demand.
- The credit insurer sees potential copper shortages of 1.5m to 6.5m tonnes and aluminium deficits of 5m to 15m tonnes, depending on the pace of decarbonisation.
- Copper appears to have the strongest independent evidence behind the long-term shortage case, while the outlook for nickel remains more contested because of rapid supply growth led by Indonesia.
The global energy transition could push copper, nickel and aluminium into sustained structural shortages over the next decade as demand from electrification and digital infrastructure runs ahead of new supply, according to analysis by trade credit insurer Coface.
The company expects growing investment in renewable power, electricity grids, electric vehicles, batteries and data centres to add to already strong demand from urbanisation, infrastructure and emerging economies.
Coface argues that the supply response will be constrained by long mine development times, declining ore grades, higher costs and growing concentration of production and refining in a relatively small number of countries.
Under its scenarios, copper could face a shortfall of between 1.5m and 6.5m tonnes by 2035, while aluminium supply could fall 5m to 15m tonnes short of demand. Its report also predicts potentially severe tightness in nickel under a faster decarbonisation pathway.
Coface metals sector economist Simon Lacoume said the combination could mark a turning point for industrial metals.
“Industrial metals are entering a new phase,” he said. “The energy transition is creating significant new demand, whilst supply is becoming increasingly unresponsive.”
Coface believes the result could be a new bull market, with copper and nickel prices potentially almost doubling over the coming decade and aluminium also rising sharply.
Copper the clearest constraint
Copper provides perhaps the strongest case for structural tightening. The metal is essential to electricity networks, renewable generation, electric vehicles and almost every form of electrification, while artificial intelligence is creating another source of demand through data centres and the power infrastructure required to support them.
The International Energy Agency reaches a broadly similar conclusion to Coface on copper. Its 2026 Global Critical Minerals Outlook projects copper demand increasing by around 7m tonnes to 2040 and says the expected supply gap in 2035 remains around 25% under its stated policies scenario, despite an improvement from last year as additional projects advance.
Bringing new production to market is difficult. Coface says fewer than 1% of mineral exploration projects ultimately become operating mines and that capacity development can now take close to 20 years. It also points to declining grades and weaker investment returns as obstacles to faster supply growth.
Those pressures are already visible in the market. Copper prices have recently reached record levels above $14,500 a tonne on the London Metal Exchange amid concerns over mine supply, geopolitical risk and potential US trade restrictions. That does not mean an immediate physical shortage is inevitable though.
The International Copper Study Group expects refined copper production to exceed use by around 96,000 tonnes this year and 377,000 tonnes in 2027, reflecting weaker near-term demand and greater secondary production from recycling.
The contrast illustrates an important distinction between short-term commodity balances and longer-term structural risk. Copper could remain adequately supplied over the next year or two while still facing a substantial deficit if enough new mines are not sanctioned for the 2030s.
Nickel forecast uncertainty
The outlook for nickel is less clear-cut. Coface expects batteries and electric mobility to create particularly strong demand and argues that the market could become severely undersupplied by 2035. Its wider thesis is that supply concentration compounds that risk, with Indonesia now dominating global nickel mining.
Yet the latest IEA analysis is noticeably less pessimistic.
Its 2026 outlook sees only a slight nickel supply gap under its base case project pipeline and says supply could be sufficient under a higher-production scenario if early-stage projects are successfully developed.
That reflects the extraordinary expansion of Indonesian nickel production and processing capacity over recent years. The country has built a dominant position in the market, backed heavily by Chinese investment.
Indeed, recent policy has been aimed partly at restraining oversupply rather than overcoming scarcity. Indonesia cut its 2026 nickel ore production quota after several years of excess supply had depressed prices, forcing some smelters to reduce utilisation.
The more durable risk may therefore be concentration rather than absolute availability. A market heavily dependent on one producing country can remain vulnerable to export restrictions, quota changes or geopolitical disruption even when global supply appears sufficient.
Aluminium constrained by power
Aluminium presents a different challenge. Coface argues that raw material availability is less problematic than the enormous amount of capital and electricity required to expand smelting capacity.
Its analysis puts 2035 aluminium supply at around 88.8m tonnes, against demand of 93.7m tonnes in its central scenario and 103.1m tonnes under net zero.
China is central to that outlook. It accounts for roughly 63% of global aluminium production but operates under a nominal 45m tonne domestic capacity ceiling. Smelters are already running close to their effective limits, encouraging Chinese producers to invest in new capacity overseas, particularly in Indonesia.
Aluminium’s electricity intensity also means energy markets directly influence supply economics. Disruption in the Middle East this year, an important aluminium-producing region, has already contributed to sharp price increases and exposed limited spare capacity elsewhere.
Coface’s broader argument is that the energy transition increasingly risks shifting part of the global energy security problem from fuels to materials.
Production and processing are highly concentrated, while governments are making greater use of export restrictions. Coface counted 1,138 measures affecting trade in critical minerals by the end of 2025, more than three times the number a decade earlier.
The IEA similarly warns that concentration remains a central vulnerability even where headline supply balances appear healthy. Excluding rare earths, the world’s largest refining country accounted for an average 72% of processing across major critical minerals in 2025.
Greater recycling, reduced material intensity and diversified sourcing can moderate the problem, while high prices should eventually encourage new supply. But long development periods mean that price signals cannot produce new mines or smelters immediately.
That is why copper in particular has become one of the clearest potential bottlenecks in the energy transition. The question is increasingly not whether the world possesses enough metal in geological terms, but whether sufficient production, processing and power infrastructure can be financed, permitted and built quickly enough to meet demand.
