A study conducted by S&P Global and partly funded by copper producers warns of a potentially growing mismatch between available copper supply and future demand as a result of the energy sector’s transition away from fossil fuels.
The study, entitled “The Future of Copper: Will the Looming Supply Gap Short the Energy Transition?” was researched and developed by New York City-based S&P Global and, according to the company, was supported by several multinational mining and metal companies, including Anglo American plc; Antofagasta plc; BHP Ltd .; Minas Buenaventura SAA Company; Freeport-McMoRan Inc; Glencore plc; Ivanhoe Mines Ltd; Rio Tinto Corp .; Sumitomo Metal Mining Co. Ltd; Taseko Mines Ltd .; Teck Resources Ltd .; Lundin Mining Co .; Trafigura Group Pte. Ltd .; and Vale Limited Mining Co.
S&P predicts that global demand for copper could almost double over the next decade, from 25 million tonnes annually now to around 50 million tonnes in 2035. The added copper will be needed “to implement the technologies that are crucial to achieving net -zero [carbon emissions] by 2050 targets. “
The study is not the first to link increased demand for copper to the transition to electric vehicles (EV) and alternative energy technology. Earlier this year, an analyst at CME warned about the supply of mined copper that was in line with future demand forecasts. Last year, a study by the consulting company Wood & Mackenzie looked at the effect of demand for copper based on the growth of electric cars in China alone, and in 2017 the research firm IDTechEx and the International Copper Association (ICA) linked the estimated growth in global electricity sales to a peak . in demand for copper
Copper scrap is far more often recycled instead of being thrown away, but investments are being made to increase the recycling of copper. In North America, Germany-based Aurubis and Germany-based Wieland are among the companies investing in new copper scrap conversion capacity.
The record high level of demand will be maintained and continue to grow to 53 million tonnes by 2050. S&P calls that figure ‘more than all the copper consumed in the world between 1900 and 2021.’
The increase in demand will largely be driven by rapid, large-scale roll-out of technologies such as electric cars, charging infrastructure, solar energy, wind and batteries. “More copper-intensive than their conventional counterparts, demand from these areas will almost triple by 2035,” writes S&P. “At the same time, the demand for copper from traditional sources that are not directly related to energy conversion will continue to grow.”
“Copper is the metal for electrification and absolutely crucial for energy conversion,” says Daniel Yergin, Deputy CEO of S&P Global. “Given the global consensus for net zero emissions by 2050, it is crucial to understand the physical materials required to achieve this ambition. The world has never produced so much copper in such a short time frame as would be necessary. With current trends, doubling will of the global demand for copper by 2035 result in significant shortages. “
S&P says that growth in new copper supply capacity – from new mines or expansions of existing projects – will hardly be able to keep up with the increase in demand. It leaves increases in capacity utilization (production as a percentage of an existing mine’s total capacity) and recycling as the main sources of additional supply, according to the study.
Under current trends – where both capacity utilization and recycling rates remain at the current 10-year global average – one of the study’s scenarios estimates annual supply shortages that could reach almost 10 million tonnes in 2035. This corresponds to 20 percent of demand estimated to be needed for a 2050 net zero world.
“This comprehensive analysis shows that even on the fringes of what can happen in copper mining and refining, there will not be enough supply to meet the requirements of a world with net zero emissions by 2050,” said Mohsen Bonakdarpour of S&P Global Market Intelligence. “Even strong price signals and stimulating policy initiatives, aggressive capacity utilization rates and all-time high recycling rates would not be enough to close the gap.”
The study also suggests that the growing supply gap will exacerbate dependence on copper imports in the United States. Imports accounted for almost 44 percent of US copper use in 2021 – up from just 10 percent in 1995. Under the study’s scenarios, this share would rise to between 57 and 67 percent by 2035.
The entire study can be downloaded from this website.
