The transition to low carbon energy could be jeopardised by the lack of new copper mines to keep pace with growing demand, industry bosses have warned.
Copper is an essential metal used in renewable energy such as turbines and electric vehicle batteries, and for upgrading the electricity grid, making it crucial in the race to reach net zero.
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.
Commenting at the FT Mining Summit, Quirk said: “Now it’s not just price. It’s these other factors that really are going to limit how quickly we can develop supplies. What may end up happening is that this [energy transition] gets extended out longer.”
This comes with miners struggling over falling commodity prices, with demand in key markets such as China weighed down by sluggish economic growth while companies struggle to protect their margins from inflation.
Copper prices have dropped four per cent this year to roughly $8,000 per tonne, well below the $10,000 per tonne peak last year.
Despite expectation of a vast upsurge in growth this decade, copper producers are cautious over committing to new projects due to the challenging investment climate, and the struggle to find high quantities to extract from the ground.
The International Energy Agency predicts that copper demand for the electricity grid alone will increase from five metric tonnes in 2020 to 7.5 Mt by 2040.
“There will be some restructuring of demand,” predicted Maximo Pacheco, chair of Codelco, the Chilean state mining group, which produced the lowest volume of copper in 25 years in 2022.
“Something has to give somewhere along the line,” added Duncan Wanblad, chief executive of Anglo American.
By Nicholas Earl via CityAM
More Top Reads From Oilprice.com:
- Regulatory Hurdles Threaten Global Green Energy Ambitions
- Armenia Joins Rome Statute, Ignoring Russian Warnings
- Rare Earth Prices Skyrocket Following Burmese Mining Suspension