A Looming Copper Bottleneck Could Derail the Energy Transition

• Global copper production may struggle to keep pace with the booming demand from clean energy technologies like electric vehicles and wind turbines.
• A significant increase in copper mining and recycling is needed to achieve net-zero emissions by 2050.
• Permitting delays and powerful mining companies could hinder efforts to expand copper supplies.

A new report from the International Energy Forum warns that global copper production may soon be critically outpaced by soaring global demand for the metal, which is a key component of many clean energy technologies. As such, the metal could soon act as an acute bottleneck in the world’s feasible pathways to meeting key climate goals by mid-century. 

Staying on a net-zero pathway by 2030 will require 12.8 million tons of additional copper supplies over the next five and a half years according to recent calculations from BloombergNEF. For comparison, just about 27 million tons of copper were consumed last year. Achieving net-zero carbon emissions by 2050 will require a whopping 460% increase in copper production, which will require 194 new large-scale mines to be brought online over the next 32 years. According to the International Energy Forum report, in a business-as-usual scenario, just 35 will be added by that time. Meeting net-zero goals will therefore require a leap from the baseline never before seen in human history. 

Many renewable energy technologies require larger amounts of copper than their fossil fuel powered equivalents. T“An EV requires 2.5 times as much copper as an internal combustion engine vehicle,” reports CNBC. “Meanwhile, solar and offshore wind need two times and five times, respectively, more copper per megawatt of installed capacity than power generated using natural gas or coal.” Copper will also be an essential ingredient for the truly gargantuan grid expansion that will be needed to support the broad electrification of our energy system.

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The looming copper shortage is not a sudden occurrence – experts have been warning about the coming bottleneck for years. “What the world needs – today’s world as well as the future, increasingly climate-threatened one – is a bigger emphasis and greater expenditures on copper discovery and exploration” Oilprice.com reported back in 2022. Sound familiar?

And if there isn’t a major economic and political shift in the way that copper markets are managed and regulated, we’ll probably be writing the same article for years, until the pathway to net-zero becomes completely unfeasible. “Despite a surge in mining exploration budgets,” Mercom recently wrote, “a mere 16 out of the 224 copper deposits unearthed after 1990 were discovered within the last decade.” 

To be sure, it’s not that there isn’t interest and money behind developing new copper mines. After all, there’s plenty of money to be made from developing additional resources. As a result of high demand and speculation around coming shortages, the prices of copper are skyrocketing. On Monday they hit their highest level on record, reaching $11,104.50 a metric ton on the London Metal exchange. 

A big part of the reason for the mismatch between copper demand and supply is the arduous and slow permitting process for building new copper mines. According to Futurity, “the average time between discovering a new copper mineral deposit and getting a permit to build a mine is about 20 years.”

But according to recent reporting from Bloomberg, there’s also another, more insidious reason for the copper shortage. The recent opinion piece contends that it’s because the world’s vital copper supply “ is being hoarded by a group of little-known mining barons.” Many companies have tried – and failed – to make major deals to boost copper mining in recent years. The two biggest attempted deals in the global mining sector over the last ten years were driven by copper interests, and both fell through. 

“It’s a pattern we’re likely to see again, thanks to the way just four families have gained influence over some of the world’s richest mineral deposits,” Bloomberg wrote. “The families’ combined net worth is some $82 billion [...]. Despite that wealth, their firms suffer from relatively high capital costs, making it harder for them to invest as aggressively as booming demand might dictate.” 

In addition to loosening these copper baron’s grips from key global copper supplies and improving permitting delays, enhanced copper recycling will be key to keeping within a net-zero pathway. Copper recycling is already a strong and well developed economic sector, yet in 2022, 40% of the whopping 2 million metric tons of copper present in e-waste alone went straight to landfills around the world. Closing this loop is therefore a critical component of the sweeping shift so direly needed in global copper industries.

By Haley Zaremba for Oilprice.com

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