COPPER MARKET
COPPER and LITHIUM are crucial to much of the modern world and, in particular, industries and technologies related to sustainable energy.
COPPER possesses electrical and chemical properties delivering superior conductivity (both electrical and thermal) increasing the efficiency of numerous energy-related systems that rely on electric motors and transformers.
These same properties are also highly prized and integral to the harvesting, storage, and distribution of energy from renewable sources such as solar and wind.
In the next ten years, the world may have to face the prospect of a huge shortfall of copper, arguably the most critical metal for today’s economies.
Copper is used in all areas of modern life from pipework and wiring in the home to batteries and motors used in both vehicles and energy harvesting and storage systems. As a result, copper is a key ingredient in the drive towards renewable power and fully electric vehicles. Unless the supply deficit is addressed, prices will keep rising as scarcity increases and this will present a huge challenge to world leaders who have pledged to fight climate change through the transition to renewable energy.
In order to close the deficit in supply (estimated to rise to 4.7 million metric tons by 2030), the copper industry would need to spend upwards of $100 billion, according to estimates from CRU Group. Worse, the potential shortfall could actually be as high as 10 million metric tons if no new mines come online, according to commodities trader Trafigura Group.
Copper usage will increase substantially as the EV market grows as EVs typically use more than double the amount of copper of a similar internal combustion engine vehicle. This is compounded by the fact that copper is also required and heavily used in providing the charging infrastructure for these same EVs.
This is something that has to be addressed as governments all around the world have been pushing ever more aggressively to move the transportation sector to alternative energy power in order to lower carbon output.
While many people first think of lithium, cobalt and nickel when it comes to EVs, due to their role in battery technology, the role played by copper should not be overlooked or underestimated. As stated above, copper is not only used within the vehicles themselves, but also throughout the national infrastructure projects that are underway in order to make widespread EV adoption a practical reality.
As more vehicles move to purely electric power, there will be a corresponding and increasing need for copper to facilitate this paradigm shift.
Graphic Source: Copper.org
There is anywhere between four and ten times as much copper in an EV than an equivalent internal combustion engine vehicle. If projections for annual production of 30 million EVs by 2030 are correct, this will mean a requirement of an additional two tonnes of copper every year will be required to meet this production demand. It’s worth remembering that this doesn’t even take into account the additional copper required for EV infrastructure which, it is estimated, further increases overall demand by between 12% and 15%.
Therefore, it is apparent that demand for copper will soar:
5x
more copper on average in an EV compared to an internal combustion engine vehicle.
As a result of this substantial increase in demand, as well as rising production costs and a noticeable deterioration in are grade, copper prices are likely to rise. Typically these circumstances would result in a more pressing search for alternatives but there is no real direct substitute for copper. Some research has been undertaking into swapping aluminium for copper in certain applications, but this has been very limited.
While copper is used in batteries and there will be some increased demand there, the result of the wider changes in the transport and mobility sectors is estimated to be a doubling (or more) of demand for copper over the next ten years.
Courtesy of Wood Mackenzie
“The technical information herein has been prepared in accordance with the Canadian regulatory requirements set out in NI 43-101 and reviewed on behalf of the Company by Mr. Darren L. Smith, M.Sc., P.Geo., and Vice President of Exploration for Patriot Battery Metas., a Qualified Person and registered permit holder with the Ordre des Géologues de Québec”