By Nneka Nwogwugwu
Global demand for copper, an essential component in manufacturing electric vehicles (EVs) and consumer electronics, will outstrip supply by more than six million tonnes by 2030, Rystad Energy projects stated.
A deficit of this magnitude would have wide-reaching ramifications for the energy transition as there is currently no substitute for copper in electrical applications. Significant investment in copper mining is required to avoid the shortfall.
Copper demand is projected to rise 16% by the end of the decade, reaching 25.5 million tonnes per annum (tpa) by 2030, compared with a supply forecast showing a 12% decrease versus 2021 levels. Estimates based on current and expected projects show supply will clock in at 19.1 million tpa, falling well short of the quantity needed to meet demand.
The growing renewables and EV markets have pushed copper demand higher, causing prices to soar. Prices have risen 70% during the pandemic. The current spike in infection cases, due mainly to the spread of the Omicron variant, is causing further supply chain bottlenecks, leaving prices at all-time highs entering 2022.
New copper resources continue to be discovered – such as Grasberg in Indonesia and Kamoa-Kakula in the Democratic Republic of Congo (DRC) – yet many remain undeveloped as potential mines can suffer from low ore grades and fiscal or political uncertainty in the host country can delay development.
Interestingly, UK brokerage Marex Spectron sees the potential for 2022 offering a copper surplus, saying in December 2021 that major new projects – such as Teck’s QBII mine in Chile and Anglo American’s Quellaveco project in Peru – could add 200,000 tpa.
Ivanhoe’s mine in the DRC could add another 70,000 tpa, while the ramp-up at Freeport’s Grasberg mine could add a further 110,000 tpa.
However, despite this supply growth potential, projects will require a politically stable environment, and their operators must be mindful of the emissions targets to entice would-be investors.
Copper mining is an energy-intensive process that produces a large amount of carbon emissions. The government of Peru, one of the world’s largest exporters of copper, ordered several mines to close in November 2021 amid environmental protests.
As a result, four mines in the southern Ayacucho region could be barred from further expansion, which would dent the copper, silver, and gold portfolio of large UK-based minerals producer Hochschild Mining. In addition, the Las Bambas copper mine in southern Peru that produces 400,000 tpa of the material – or about 2% of global supply – will reportedly shut production due to transportation issues.