Benchmark: AI Boom Fueling Battery Metals Demand, but EVs Remain King

Lithium demand from AI data centers to quadruple by 2035

Adding to the overview, Adam Webb, Benchmark’s head of battery raw materials, said lithium iron phosphate (LFP) batteries are expected to dominate these applications due to their lower cost and suitability for stationary storage.

That trend is projected to drive substantial increases in demand for key battery inputs over the next decade.

Benchmark forecasts lithium demand tied specifically to AI data center-related energy storage will rise from roughly 15,000 metric tons in 2025 to nearly 70,000 metric tons by 2035.

Demand for purified phosphoric acid is expected to climb from 26,000 metric tons to 127,000 metric tons over the same period, while synthetic graphite demand could increase more than fivefold.

“We’re talking about really significant growth in the demand for raw materials from this sector over the coming 10 years,” Webb said.

Still, analysts cautioned that data centers will remain a relatively small portion of total battery metals demand compared to electric vehicles, which continue to dominate consumption forecasts.

By 2035, data center-related storage is expected to account for roughly 11 to 12 percent of total battery energy storage demand for these materials, but only a single-digit share of overall global demand.

Supply chain concentration remains a concern, as China currently controls 70 percent of refined lithium production and over 90 percent of spherical graphite processing. While diversification is underway in North America and Africa, China is expected to remain the dominant refining hub for the foreseeable future.

Benchmark estimates China currently controls roughly 70 percent of refined lithium production, more than 70 percent of purified phosphoric acid refining and over 90 percent of spherical graphite processing used in battery anodes.

While diversification efforts are underway in regions such as North America and East Africa, Webb explained China is expected to remain the dominant refining hub for years to come.

“Overall, there’s going to be reliance for these raw materials on China,” he said.

The AI and copper correlation

Beyond batteries, copper demand is also rising as AI infrastructure expands.

Benchmark copper demand analyst Anya Hurd said copper plays a central role across data center construction, grid infrastructure, cooling systems and semiconductor manufacturing.

The firm expects copper demand tied to data center infrastructure to approach 500,000 metric tons this year and surpass 1 million metric tons by 2040.

Hyperscale AI facilities are especially copper intensive due to their dense computing layouts and advanced liquid cooling systems. However, Hurd noted that while data centers are becoming an increasingly important growth market, they still represent a relatively small share of overall copper consumption globally.

“Even though it’s of growing importance, it’s still a very small sub-component,” she said.

Interestingly, copper prices have recently correlated more with AI stocks than traditional supply-demand fundamentals. This psychological link has amplified investor interest, even as physical consumption remains modest compared to total global supply.

She attributed this partly to a high-profile error.

“In an article released by NVIDIA (NASDAQ:NVDA), there was a misprint of 500,000 tons of copper being needed by a one-gigawatt data center,” she said. The figure was later revised to 500,000 pounds — a discrepancy of 2,200 times.

“This has led to a lot of headlines, click baiting headlines … linking the two,” Hurd said, adding that the psychological link between AI growth and metal demand has amplified investor interest, even as physical consumption remains modest.