A “deficit of 5 to 6 million tonnes” in the medium term in the world: tensions between supply and demand for copper are worrying for the energy transition, as the red metal is central to the electrification of uses, a major lever reduction of greenhouse gases.
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Why is copper important in the energy transition?
“When you want to transport energy, inside the car, the building, or between the production plant and your place of consumption, you will need to pass an electric current and today we do not have nothing has been found better, in an acceptable cost/strength ratio, than copper,” explains an industrialist.
Enough to arouse desire: the world has entered into forced electrification in order to reduce greenhouse gas emissions. Europe, in particular, wants to reduce its CO2 emissions by 55% in 2030 compared to 1990. At the same time, emerging countries are “in the process of electrification”, underlines Vincent Dessale, director of operations of the Nexans group.
How is demand evolving?
According to the IEA, which is hosting a summit on critical transition metals this week, the copper market grew by around 50% between 2017 and 2022, reaching almost $200 billion.
“We consumed around 9 to 10 million tonnes (Mt) of copper in the world around twenty years ago, today we must be at 23, 24 Mt, so we have doubled in 20 years . (…) We think that in just ten years, we will probably be between 35 and 40 Mt,” specifies Vincent Dessale.
In addition to connecting offshore wind turbines to the electrical networks, which requires a lot of cables, an electric vehicle requires “overall twice as much copper as a thermal vehicle,” according to him.
Are we heading towards a shortage?
The statistical models used for years “always predict a supply deficit”, but this has not occurred to date, “for different reasons: price developments, various and varied market dynamics, the fact that substitution sometimes occurs,” explains Laurent Chokoualé, of the International Copper Association (mining companies and smelters), which represents around 50% of the tonnage of copper produced in the world.
But, given the exponential growth in demand, “we could actually find ourselves with a problem at the beginning of the 2030s, with a deficit of around 5 to 6 Mt,” he adds.
The International Copper Study Group, an intergovernmental body, estimates the quantities of copper “locked” in mining projects currently being approved over the next five to ten years at around 10 Mt.
“The quicker we can put this production tool into operation, the more we will be able to at least reduce the concerns that could arise about the adequacy of supply and demand,” underlines Mr. Chokoualé.
But, underlines the IEA, “existing operations still encounter difficulties”, because Chile, the world’s largest producer, “faces a decline in ore quality and water shortages”, and protests from communities local “could disrupt supplies” from Peru, the second largest producer.
Are there any solutions to avoid it?
Several levers are mentioned: the use of aluminum, a good current conductor, does not pose resource problems, but its supply chain presents difficulties. Produced from bauxite to make alumina, then aluminum, it requires “three different production stages, not always in the same geographical areas,” underlines Mr. Dessale.
In addition, its production is very energy intensive (and carbon emitting) and its price is therefore very dependent on energy costs. Finally, “there is a geopolitical element, one of the largest aluminum producers in the world is Russian and that has generated additional constraints on this market,” he adds.
Another lever frequently mentioned: copper recycling.
The International Copper Alliance estimates the share of copper in circulation currently recycled at 40%, which represents “around a third of the supply annually”. This lever is all the more important in industrialized countries, which are full of “urban mines”.
If a long-term recycling of 100% of copper is difficult to envisage, given the difficulties of access to this resource, often buried in the ground or in buildings, the rate of 40% can increase, “through a general improvement of the systems collection, and an improvement in technologies for separating copper from other elements,” concludes Mr. Chokoualé.