The Third Coming of Copper Looks Underway

Green technologies are further transforming demand for specific commodities. Lithium appears to be #1 element which legit supplies are poised to be depleted in the coming years assuming the trend continues. However, demand for copper is also booming, whereas supply is not only finite, but has been under pressure due to prolonged Covid restrictions.

According to a new report from S&P Global, this fact jeopardizes attainability of net-zero emissions targets. Copper is key to electric vehicles, wind and solar power, as well as the infrastructure that transports and stores renewable energy. S&P Global’s new report forecasts copper demand nearly doubling by 2035. According to the research institution, the energy transition is expected to be dependent much more on copper than the current energy system as a whole.

Copper peaked in March, but has since then generally demonstrated bearish sentiment that saw base metals prices slide towards the end of 1H 2022. However, now prices seem to be stabilizing and there are signs of an impending recovery.

Electric vehicles, solar and wind power, and batteries for energy storage – all of them consume substantial amounts of raw copper. An EV requires 2.5 times as much copper as an internal combustion engine vehicle, according to S&P Global. The report forecasts copper demand nearly doubling to 50 million metric tons by 2035. By 2050, demand will reach more than 53 million metric tons. To put this figure in perspective, S&P Global noted that that’s “more than all the copper consumed in the world between 1900 and 2021.” Meanwhile, solar and offshore wind need two times and five times, respectively, more copper per megawatt of installed capacity than power generated using natural gas or coal.

Copper is also key to the infrastructure that transports renewable energy, thanks in part to its electrical conductivity and low reactivity. Its uses include cables, transistors and inverters. On July 20 this year, FT reported that one of world’s largest copper miners, Antofagasta, lowered its FY output target to a range of 640K to 660K tons, from 660K to 690K previously, blaming a leak in an underground pipeline at its Los Pelambres operation in Chile and continued “uncertainty about water availability”. The company also admitted an increase in costs because of rising diesel prices and “other input prices”.