As the world moves toward achieving net-zero emissions by 2050, copper has become an essential commodity due to its critical role in green technologies such as electric vehicles (EVs), renewable energy infrastructure, and energy storage systems. The projected surge in copper demand, particularly driven by the transition to clean energy, raises concerns about whether future copper resources and supply will be sufficient to meet the increased demand, especially by 2035, when global copper demand is expected to peak.
The International Copper Study Group (ICSG) projects that global copper demand will reach 48.9 million tonnes (Mt) by 2035, a significant increase from 26.93 Mt in 2023. This surge in demand creates a 22.1 Mt supply gap, posing a major challenge for the copper industry in meeting the needs of growing green technologies and infrastructure.
However, historical trends in mining capacity growth offer some optimism. Copper mining capacity has been growing at a compound annual growth rate (CAGR) of 3%, which alone will help reduce the demand gap by approximately 11.5 Mt, narrowing the gap from 22.1 Mt to 10.5 Mt.
Several strategies have been proposed to help close the remaining supply gap by 2035. One significant approach is improved recycling, which is expected to play a crucial role in meeting future demand for copper. With rising copper prices and advancements in recycling technologies, it's projected that recycled copper could contribute 2.28 to 4.56 million tonnes to the global supply by 2035.
Another strategy involves increased substitution of copper with alternative materials. Although the use of substitutes remains limited, materials like aluminum may replace small portions of copper demand in applications such as electrical wiring. However, the impact of substitution is expected to be modest, adding only about 0.14-0.28 million tonnes.
Enhancing mining capacity utilization is also a viable strategy. There are opportunities to improve the efficiency of existing mining operations by optimizing utilization rates, reducing bottlenecks, and extending the lifespan of mining equipment. If capacity utilization increases by 4 to 8%, this could add 1.13 to 2.26 million tonnes of copper to the market. Additionally, reopening closed mines could contribute significantly to global supply. Currently, 31 copper mines are in care and maintenance and hold substantial resources. Reopening these mines could yield an extra 0.68 million tonnes of copper.
Finally, the development of new mines remains a longer-term strategy, as it requires expedited progress on advanced exploration and pre-feasibility projects. This approach could add between 1.66 and 3.31 million tonnes of copper to the market, although it requires significant time investment due to the complexities of new mine development.
Recycling will play a crucial role in the future supply of copper, as it has already proven significant in 2023, when recycled copper accounted for approximately 16.9% of global production, translating to around 4.56 million tons. Looking ahead, projections suggest that technological advancements and rising copper prices could lead to a 50% increase in the contribution of recycled copper by 2035.
In terms of substitutions, the replacement of copper with alternative materials has been quite limited in recent years, with only about 0.95% of copper demand met by other materials. While innovation in alternatives like copper-clad aluminum continues, the overall impact of these substitutions is expected to remain modest, contributing only 0.5%-1% to copper demand. Consequently, copper is likely to maintain its vital role in green technologies.
Additionally, various strategies to increase copper supply are underway. Improved utilization of existing mining capacity, along with the expansion of existing mines and the reopening of previously closed mines, is expected to provide a significant portion of the copper needed to address the expected supply-demand gap. By enhancing efficiency, existing mines could potentially add between 1.13 million and 2.26 million tons of copper each year. Furthermore, reopening closed mines might contribute an additional 0.68 million tons, while the expedited development of advanced mining projects could yield between 1.66 million and 3.31 million tons. These efforts collectively offer a range of solutions to help meet the anticipated supply challenges by 2035.
In conclusion, while projected copper demand by 2035 will create a significant supply gap, various strategies are available to close it. The historical growth in mining capacity, combined with secondary supply sources such as improved recycling, substitution, and enhanced capacity utilization, will help mitigate the shortfall. However, even under the best-case scenario, a low increment scenario may still leave a gap of 3.65 Mt.
On the other hand, in a high-increment scenario, the gap may be fully bridged, and the copper market could even experience periods of oversupply. However, fluctuations in supply may occur due to factors such as warehouse stockpiles being drawn down or geopolitical challenges.
Ultimately, while copper shortages could occur from time to time, the copper industry is expected to meet rising demand and contribute to achieving global net-zero emissions goals by 2050. The strategies outlined above, particularly the expansion of mining operations and improvements in recycling technologies, will play a critical role in ensuring that copper supply remains adequate to support the green transition. However, the industry will need to continue innovating and adapting to meet the growing demands of a net-zero economy while addressing environmental and geopolitical challenges.
