Whalesbook
Amazon.com Inc. has struck a deal with Rio Tinto for copper output from an Arizona mine, securing a critical material for its expanding artificial-intelligence data centers. This move highlights the intense competition for raw materials essential to the AI revolution.
Securing AI's Thirst for Copper
The e-commerce giant's cloud division, Amazon Web Services, signed a two-year pact with Rio Tinto for copper produced at the Johnson Camp mine. This facility recently became the first new source of U.S. copper in over a decade, restarted using Rio Tinto's innovative Nuton technology. Data centers require vast quantities of copper for wiring and electrical components, with top-tier facilities needing tens of thousands of metric tons.
Innovative Extraction Methods
Rio Tinto's Nuton venture employs a bioleaching process, using bacteria and acid to economically extract copper from low-grade ore previously deemed uneconomical. This technology is crucial for unlocking reserves left behind at older mine sites, a vital strategy as new discoveries become scarcer and demand surges. The Johnson Camp mine is expected to yield 14,000 metric tons of copper cathode over four years, though this represents only a fraction of Amazon's total needs.
Market Forces and Future Outlook
Copper prices have surged, recently trading above $6 a pound in New York after gaining 41% last year. This rally is fueled by robust demand from AI, electric vehicles, and renewable energy installations, outweighing slower activity in traditional sectors. However, mining executives warn that copper shortages could derail the AI boom. A S&P Global study projects AI will drive copper demand up 50% by 2040, potentially creating a 25% shortfall as mining output struggles to keep pace.