Auto fleets’ shift to electric vehicles (EVs) in a global drive to cut carbon emissions will involve a drawdown on copper, resulting a copper deficit that could transform markets and spur additional supply.
Cars powered by electricity are able to push a greener agenda by eliminating petrol emissions and creating a market for renewable energy. These sources, such as wind and solar are increasingly replacing coal in power generation. The key commodity for EVs will be copper. For that, the world is currently looking at developing new projects.
According to the IEA, copper will remain the most broadly used metal in renewable energy technologies. For instance, a battery EV uses 83kg of copper, compared with 23kg of copper in an internal combustion engine vehicle. Additionally, batteries and chargers require a lot of copper, while renewables, such as wind and solar power generation, require tons of copper.
The world’s two largest economies are headed along this (copper-based) greener path. China’s will continue to grow amid a pledge to shift to greener practices. U.S. President Joe Biden’s infrastructure plans and those to cut emissions are already bringing batteries to the forefront.
Goldman Sachs predicts that by 2030, copper demand will grow nearly 600% to 5.4 million tons. In North America, the EV market will total $2.7 billion by 2021 and $18.6 billion by 2030. And by 2040, passenger EVs alone will consume more than 3.7 million of copper annually.
According to the US Geological Survey, 2019, global copper reserves are estimated at 830 million metric tons, with annual demand totalling 28 million metric tons. Additionally, discovered and undiscovered deposits total over 5 billion metric tons.
At the same time, of the 224 copper deposits that were found between 1990 and 2019, only 16 were discovered in the past ten years. Meaning that discovering and developing new mines should be a critical priority to meet the growing demand for the green energy transition.
Growing demand and largely stagnant output have turned investors to the projects that seemed very complex in realization in the near past. One of the recent examples is the development of Udokan deposit located in Russia’s Far East where low temperatures are accompanied with very long distances that require very serious investment in the infrastructure. But it has reserves of over 26 million metric tons and considered the largest untapped copper deposit in Russia and the third-largest in the world. The project, owned by Russian billionaire Alisher Usmanov, is expected to become operational next year.
Another example is China’s Molybdenum which announced plans to invest $2.51 billion to double copper and cobalt production at Tenke Fungurume mine in the Democratic Republic of Congo. The project should be completed in 2023, includes building three ore production lines, which would increase the average annual copper output at the mine by 200,000 tonnes.
There are plenty of other examples in the pipeline as well.
Increased investments into copper mining will likely emerge as a response to price increases as higher demand kicks in. Copper is the necessary companion to delivering batteries that will lower emissions in electric vehicles and transport and elsewhere globally. Supply of the metal will follow suit with growth.