Experts warn that because the gap between copper supply and demand is expected to grow significantly in the coming years, the global economy may be severely affected and efforts to achieve net-zero emissions hampered. Even if more incentive policies are put in place and new copper mines are created, it would not be enough to close the widening disparaty.
Globally, the demand for copper will increase significantly due to its increasing use in solar panels, electric vehicles and other green technologies. Demand for the red metal is expected to grow from the current 25 million tons to 53 million tons by 2050. However, supply is expected to have a shortfall of 2.5 million tons, as no further mining or recycling activities are forecast, S&P Global reported.
S&P Global highlighted that the gap between supply and demand is expected to begin to widen significantly in 202. “People who say that there is enough copper supply out there are not taking into account the scale of the energy transition. Without some give, you are not going to be able to achieve those climate goals,” Dan Yergin, Vice Chairman, S&P, told Reuters.
S&P said that even if copper mine output is expanded or new mines are developed, they are unlikely to be able to keep pace with rising demand, as it takes around 16 years for such projects to become highly productive. “Trying to satisfy increasing demand is where we run into a problem. The giant, high-grade copper deposits exposed on surface have been found, are already being mined and, in some cases, have already been depleted. We now need to drill deep below the surface to find new deposits. All of this in the face of increasing regulatory burden and increasing taxation. It is getting harder and harder to put a copper mine into production, so copper shortages are not easily supplied,” Steve Roberston, CEO, Infinitum Copper, told MBN.
Mohsen Bonakdarpour, Executive Director of Economics and Country Risk, S&P Global Market Intelligence, said that even if copper has strong price signals, more incentive policies are put in place and recycling rates increase, it would not be enough to close the gap between supply and demand. Consequently, the copper shortages could become a destabilizing threat to international security.
Billionaire mining financier Robert Friedland said that the wars of the past century were fought over oil. However, in the future, battles could focus on copper and other strategic metals. “In the short term, we have had a big increase in the price of copper. But in the medium term, copper will become a national security problem. It has become fundamental to what we want to do with our economy," said Friedland at the CRU World Copper Conference.