Paris – The long global path to carbon neutrality to replace energy systems dependent on fossil fuels runs into a pitfall: the transition requires more copper than companies can currently produce.
Supply in the world copper market is expected to record a shortfall of up to six million tonnes relative to demand in the medium term, raising concerns about the energy transition.
Experts consider the red metal, which has not received enough attention in the past four years, to be a vital artery for energy networks, electrical equipment and other resources and industries, and a key means of reducing greenhouse gases.
Nexans Group Operations Director Vincent Desalle says: “If you want to transfer energy within a car or a building or between a production plant and a point of consumption, you have to send electricity, and currently we don’t have any. Better than copper, with acceptable cost and durability.”
Desalle confirmed to Agence France-Presse that the world was forced to rely on electricity to reduce greenhouse gas emissions, which increased demand for copper.
Europe, in particular, wants to reduce carbon dioxide emissions by 55 percent by 2030 compared to 1990. At the same time, developing countries are turning to electricity.
The International Energy Agency, which is organizing a summit on minerals critical to the energy transition this week, confirms that the copper market will see growth of about 50 percent between 2017 and 2022, reaching about $200 billion.
Diesel explained that two decades ago the world consumed 9 to 10 million tons of copper, and now its consumption is 23 to 24 million tons, which means the number has doubled.
“We believe that in just ten years, global consumption will reach 35 to 40 million tonnes,” he said.
A study by Standard & Poor’s Global last February indicated that annual demand will double and reach 50 million tonnes by 2035, and that assumes sufficient red metal is available, which of course is not.
Copper is a relatively abundant electrical conductor, has no better substitute, and can be found in all kinds of products, from toasters to air conditioners, computer chips, smartphones and electric cars.
Diesel pointed out that in addition to the many cables needed to connect offshore wind turbines to power grids, a battery-powered car typically requires twice the amount of copper as a conventional car.
It’s unclear whether the usually cautious mining sector will absorb the scale of investment needed to meet the world’s needs, while faltering means the energy transition program could be derailed.
Laurent Soccoli of the International Copper Association, which includes mining companies and smelters and represents 50 percent of the world’s tonnage of copper produced, pointed out that the data pointed to the possibility of a “supply shortfall” for several years.
He stressed that the shortage was not yet due to “various reasons, including the development of prices and (copper’s) periodic replacement”.
Due to the tremendous growth in demand, he said, “we will face a problem with a shortfall of around 5 to 6 million tonnes in the early 2030s”.
Several ways to avoid shortages in the copper market have been mentioned, including the use of aluminum, which is a good conductor of electricity and does not see a shortage of resources, but its supply chain poses difficulties.
According to Desalle, “Its production requires three different stages, and they are not always in the same geographical areas.”
Aluminum production uses a large amount of energy and leads to carbon emissions, so its price depends on energy prices.
He added, “Finally, there is a geopolitical element, which is that Russia, one of the world’s largest aluminum producers, has created additional restrictions on this market.”
As a way to avoid shortages in the copper market, the issue of recycling it is often mentioned among some experts and companies in the field.
The International Copper Association estimates that 40 percent of this metal is currently recycled, representing “one-third of the annual supply.” The importance of this method is increasing in industrialized countries.
According to Shokwali, while full copper recycling is difficult to envision in the long term, since it is often buried in the ground or in buildings, the 40 percent rate could be increased “through aggregate collection methods and improved copper separation techniques.”
Forecasts show that supply growth will peak in 2024 as fewer new mining projects come online and existing copper resources dry up.
Goldman Sachs analysts estimate that mining companies will need to spend nearly $150 billion over the next decade to deal with a shortfall of up to eight million tons.
According to the Global Copper Research Group, the global copper deficit in 2021 was 441 thousand tons, which is less than two percent of the demand for the refined metal.
Standard & Poor’s Global’s current worst-case scenario projections indicate a deficit equivalent to twenty percent of consumption by 2035.