Climate risk to copper threatens chip supply

Pricewater house Coopers

Risk concentration and timelines

Climate risk to copper threatens chip supply by 2035, PwC warns. Climate risk to copper could disrupt one-third of global semiconductors. Climate risk to copper stems from drought and extreme weather at key mines. By 2035, 32% of chip production will rely on at-risk copper. By 2050, exposure could rise to 58% without adaptation.

Chile’s exposure underscores the systemic risk to copper supply. Today, one quarter of Chilean copper faces drought disruption. Within a decade, that share could reach 75% of output. By 2050, the risk could span 90–100% of production. Therefore, global chipmakers inherit Chile’s water stress through copper inputs.

Most copper-supplying countries will face drought risk by 2035. The risk set includes the majority of 17 key producers. As a result, single-region sourcing will amplify volatility. Hence, procurement planning must assume multi-year water shocks.

Mitigation strategies and industry responses

Miners are deploying desalination and water recycling to reduce risk. Several Chilean operations already pipe desalinated water to site. However, these projects require large capital and reliable power. Therefore, build-out speed may lag rising climate pressures.

Downstream buyers must diversify copper inputs and forms. Smelter contracts should include climate and water performance clauses. Meanwhile, scrap utilization can buffer refined copper tightness. As a result, OEMs can temper risk to chip supply chains.

Technology choices can also ease the risk to copper exposure. Closed-loop water systems lower fresh-water dependence at plants. Dry-stack tailings reduce evaporation and seepage losses. Therefore, integrated ESG and engineering plans become commercial necessities.

The Metalnomist Commentary

Climate risk is now a fundamental copper cost and availability driver. The winners will pre-finance water resilience and lock diversified supply. Expect copper contract structures to price water risk more explicitly.