Lack of copper mines could threaten global energy transition

October 9, 2023

The demand for copper is expected to double by 2035 as the world works to transition to more electrification in automobiles and energy sources yet the lack of copper mines currently under development could slow progress.

Some of the world’s top copper miners warned that factors such as inflation, labor shortages and permitting delays for new mines threaten the energy transition. The warnings came at the FT Mining Summit in London, Oct. 5-6.

Kathleen Quirk, president of Freeport-McMoran, the largest US copper producer, told the Financial Times that higher copper prices alone would not be enough to secure enough metal needed for the world to go green.

“Now it’s not just price. It’s these other factors that really are going to limit how quickly we can develop supplies,” she said, speaking on the sidelines of the FT Mining Summit. “What may end up happening is that this [energy transition] gets extended out longer.”

Copper prices have dropped 4 percent this year to about $8,000/t, down from more than $10,000 at their peak last year, as the growth in the world economy has cooled off and production at new mines in Peru and Chile has been increasing.

In addition to soaring demand for electric vehicles, copper demand is being driven by the need to support the economic rise of India and other developing nations. The living standards of the average westerner requires 200-250 kg of copper per person, versus 60 kg on average globally, according to Anglo American, one of the world’s largest miners.

Copper’s use will become ever greater as the world goes green, resulting in it being dubbed the “metal of electrification,” with forecasts that it will double to a 50 Mt market by 2035 compared with 2021 levels, according to S&P Global, which predicts a “chronic gap” between supply and demand.

Also speaking at the FT summit, Robert Friedland, billionaire mining magnate and founder of Ivanhoe Mines, said that the current bout of softer prices would stoke shortages later on.

Despite huge expected growth, copper producers are struggling to generate enough large projects because the commodity is becoming harder to find in high quantities in the ground. For example, Freeport is turning to new technology to extract copper from old piles of mining waste ahead of expanding mines.

Farid Dadashev, head of European metals and mining at RBC Capital Markets, said that executives were proving reluctant to invest in mines that will take 10-15 years to build and cost billions of dollars with low prices and political uncertainty in mining jurisdictions.

“When you add further complexity from longer permitting timelines, higher inflation and generally declining ore body grades, this perhaps explains why we’re finding ourselves in the situation where it’s likely there won’t be enough copper to meet decarbonization goals in the next few decades,” he said.



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