Surging demand and insufficient supply of new copper projects could result in copper prices jumping to $20,000 per metric ton in a few years, double the current price of around $10,000 per ton which is the highest in a decade, analysts say.
Soaring demand for critical minerals to support the energy transition, including copper, has already made copper one of the hottest metals this year, with prices jumping to $10,000 per ton, double from the pre-pandemic levels due to the global push toward decarbonization and government support for electric vehicles (EVs) and renewable electricity generation.
Copper will be the key metal in the energy transition. But expected supply from existing mines and projects under construction is estimated to meet around 80 percent of the copper the world will need by 2030 in a scenario consistent with climate goals, the International Energy Agency (IEA) said in its new report 'The Role of Critical Minerals in Clean Energy Transitions' this week.
"Electricity networks need a huge amount of copper and aluminium, with copper being a cornerstone for all electricity-related technologies," the IEA said.
However, the copper projects are seeing a decline in resource quality over time. For example, the IEA says, the average copper ore grade in Chile declined by 30 percent over the past 15 years. Investments in copper projects are also lagging behind the expected surge in demand.
That's why it's no surprise that David Neuhauser, founder and managing director of U.S. hedge fund Livermore Partners, told CNBC this week that "copper is the new oil."
"I think copper is the new oil and I think copper, for the next five to 10 years, is going to look tremendous with the potential for $20,000 per metric ton," Neuhauser told CNBC.
A few days ago, Bank of America said in a research note that if inventories of copper deplete, the price of the key energy transition metal could hit $20,000 per ton as early as 2025.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More