A real one is expected boom for the copper marketa fundamental raw material for industry and for the energy transition, which will see demand grow between now and 2035accentuating the gap already forecast by 2025. The green transition in fact it will accentuate the deficit of the market, which has to deal not so much with reserves, which are abundant, but with investments required by the greater extraction. And not to mention that the water scarcity it is one of the limits (environmental and social) to copper production. This is what emerges from a report by J Safra Sarasina Swiss private bank based in Basel, entitled “The Copper Age – The energy transition needs more metals and minerals”.
Prices expected to increase
“We expect further upward price pressures and we present the options to take advantage of them,” explains analyst Frank Hartel, Head Asset Allocation at J. Safra Sarasin, adding “the energy transition requires significant investments in infrastructureas electricity production, but also heating and mobility still depend to a large extent on fossil fuels.”
“Copper is particularly crucial in almost all of these technologies. As regards the production of electricity – underlines the expert – it is necessary to invest significantly in solar panels and wind turbines, which rely heavily on copper and other minerals for their production. The key question is whether the increase in demand resulting from the green energy transition can be met by an equivalent increase in supply.”
Highly concentrated production
The supply of copper ore is still highly concentrated: according to the latest available data from the US Geological Survey, Chile (24%) and Peru (10%) dominate significantly copper mining with over a third of global mineral production in 2023, followed by Congo (10%) and China (9%). The top four producers account for more than half of global extraction.
As for the refining of copper, the China is the dominant country with 42% of refinery production, again followed by Chile (8%), Congo (7%) and Japan (6%). Again, the top four account for nearly two-thirds of global refinery production.
Large, untapped reserves
The copper market should not be in tension, since there are underground ones large reserves with large untapped resources. The largest ones are found in Chile (21%), Australia (11%) and Peru (9%), which together account for over 40% of global reserves.
Today the operations of production and processing of copper are highly concentrated in a small number of countries, and therefore the system is vulnerable to environmental and political instability, geopolitical risks and possible export restrictions.
Among the environmental factors, mention should be made of: water scarcityto which are added a series of climate risks, including extreme heat or floods, which pose a challenge to ensuring reliable and sustainable supplies.
But water scarcity is not just an environmental problem, it also creates tsocial tensions, as it puts mineral production and water supply for the indigenous population into competition. Social tensions therefore have a direct impact on the security of copper supplies, as demonstrated by the lockdowns that have occurred in some producing countries this year.
The role of recycling
The circular economy could help address rising demand for metals. The recycling In fact, copper can play an important role in easing the burden of primary supply of raw materials at a time when demand is starting to increase. For example, it is expected that the amount of spent EV batteries cwho reach the end of their first life cycle will increase significantly after 2030, offering the potential for reduce pressure on investments for primary supply.