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The copper mine shortage threatens to worsen as global demand for copper increases. We could eventually face a serious copper crisis, a significant threat to the fight against climate change.

Everyone is obsessed with lithium, which is undergoing a veritable rush worldwide. But we must not forget copper, which is just as important in the energy transition. Thanks to its unique properties, the metal has numerous applications in renewable energy systems such as solar panels, energy storage and especially electric vehicles.

Key points: Global copper producers warn of a lack of mines to mine the metal. According to Goldman Sachs, the number of permits for new copper mines has fallen to its lowest point in a decade. This is particularly worrisome given the time and investment (between 10 and 20 years) required for permit approvals and mining projects.

  • Political leaders are hesitant to invest in costly and long-term mining projects because of falling prices and political uncertainties in the countries where these substances are located, analysts explain to the Financial Times.
    • Copper prices have fallen 4 percent this year and are around $8,000 a ton. Last year it peaked at more than $10,000.
    • This decline is attributed to the global economic slowdown and inflation.
    • This is encouraging leaders, investors and banks to be cautious in financing new projects.
  • The labor shortage is also limiting new supplies of copper.
  • Moreover, it is becoming increasingly difficult to discover this resource in large quantities underground. Some companies therefore prefer to extract copper from mining waste. But "even if everything could be collected, recycling materials would in no way be sufficient to meet demand," said Roland Harings, the CEO of metal company Aurubis. "We need more mining activity because the demand for copper will only increase in the coming years."

Is a serious copper shortage looming?

There could be a global shortage of copper over the course of this decade, according to these copper producers.

  • Given growing climate ambitions, the copper market is expected to grow to 50 million tons by 2035, according to S&P Global. That's double the 2021 figure.
  • Global supply was still expected to increase 26 percent to 38.5 million tons a year by 2035. But it would be expected to be 1.7 percent lower than demand, according to the International Copper Association (ICA).
  • With electrification, copper demand is expected to increase to 36.6 million tons by 2031, while supply is expected to be 30.1 million tons. Thus, a shortage of 6.5 million tons is expected, according to consulting firm McKinsey.
  • In response to increasing demand, Goldman Sachs expects the price of copper could rise to $15,000 per ton by 2025. That represents a 67 percent increase over current prices.

Chart: expected demand for metals

Energy transition - and climate - at risk

Recap: A potential copper mine shortage could seriously jeopardize the energy transition to cleaner energy sources.

  • In 2020, environmentally friendly uses of copper represented 4 percent of copper consumption. By 2030, this was expected to rise to 17 percent, according to Goldman Sachs. However, if we hope to achieve the goal of "net zero emissions," 54 percent more copper would be needed by the end of the decade, according to the investment bank.
  • "If we don't have enough copper, this could have serious implications for the energy transition," Jeremy Weir, CEO of metals trader Trafigura, warned back in April at the World Copper Conference.
  • "It is impossible for the world to meet the terms of the Paris climate agreement if we don't have an increase in the supply of copper and other metals," said Joshua Meyer of FLSmidth, a mining equipment manufacturer.

(nd/evb)

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