Amazon Secures US Copper Supply in Strategic Bet on AI-Driven Future
Table of Contents
Amazon is making a notable investment in securing its access to a critical resource for the future of artificial intelligence: copper. The e-commerce and cloud computing giant has partnered with mining firm rio Tinto to reopen a major copper extraction site in Arizona, signaling a strategic move to bolster supply chain resilience and capitalize on the surging demand driven by data centers and electrification.
The Looming Copper Crisis
The demand for copper is surging, driven by the rapid expansion of data centers and the increasing electrification of the global economy. A single data center requires tens of thousands of tons of copper for its cabling, electrical systems, and components. According to an analysis by S&P Global, the rise of artificial intelligence alone is projected to increase copper demand by 50% by 2040, while production is expected to decline, potentially creating a 25% deficit. “This emerging imbalance constitutes a systemic risk for global industry, for technological innovation and for economic growth,” one analyst noted.
Reviving American Mining
The project centers around a previously abandoned mine in Cochise County, Arizona, which is now the first source of copper in the United States. Reopening the site is part of a broader trend of bringing mining operations back to America, fueled by concerns over supply chain resilience and national security. The move also aligns with a potential shift towards an “America First” industrial policy, reminiscent of the Trump administration, as Amazon seeks to prioritize domestic sourcing.
A Novel Approach to Copper Extraction
Rio Tinto is employing a cutting-edge extraction method developed through its RIO (Rank-Importance-Opportunity) system, designed to exploit low-concentration copper deposits previously considered unworkable.The company’s subsidiary, Nuton, utilizes a process based on bacteria and acidic solutions to recover copper from these ores. This represents a “great industrial bet,” as Nuton has secured a two-year supply contract with Amazon Web Services.
Beyond Data Centers: Amazon’s Expanding Role
Amazon’s investment extends beyond its well-known e-commerce operations. The company has evolved into a technological multi-utility,with Amazon Web Services (AWS) dominating the cloud computing market. AWS offers over 200 on-demand services, including computing, storage, and artificial intelligence, to a wide range of clients. This expansion necessitates a secure and reliable supply of raw materials like copper.
A Symbiotic Exchange
The partnership between Amazon and Rio Tinto is a two-way street. In exchange for the copper,Rio Tinto will receive access to AWS’s cloud computing services and advanced analytical tools to improve efficiency and accelerate its industrial expansion. “We work upstream, on the raw material, to identify solutions to low emissions that support the growth of our business,” explained Chris Roe, global head of carbon strategies at Amazon. “This applies to steel, to concrete and, of course, to copper necessary for our data centers.”
Sustainability and Decarbonization
Rio Tinto emphasizes its commitment to sustainable mining practices.Katie Jackson, CEO of Rio Tinto’s copper division, stated, “Not only do we recover material that would or else have remained unused, but we do so by reducing carbon emissions and water consumption.” This focus on decarbonization aligns with Amazon’s own sustainability goals, even amidst a broader scaling back of federal environmental policies.
Global Implications and Market Pressures
Rio Tinto has already reopened a mine east of Tucson and is exploring opportunities to extend the Nuton technology to sites in South America. The global demand for copper is driving prices to record highs, with a 41% increase in the last year, exceeding $6 per pound. The White House is even considering additional tariffs on copper products, building on existing 50% taxes on items like cables and pipes.
While the 14,000 tons of copper expected from the Nuton project in Arizona won’t power a single data center, it marks a crucial first step in a long-term strategy to secure a domestic supply of this vital resource. The metal will be destined exclusively for companies within the USA that produce components for Amazon’s infrastructure, ensuring a secure and resilient supply chain for the future of cloud computing and artificial intelligence.
