As of April 22, 2024, a forecast by Trafigura, a leading commodity trader, indicates that copper consumption is expected to increase dramatically over the next decade. This surge in demand results from the growing needs of several high-tech industries, including electric vehicles, power infrastructure, artificial intelligence (AI), and automation. This prediction is in line with broader trends in global economic development and technological innovation, indicating a significant impact on copper markets worldwide.
The primary drivers behind this expected rise in copper demand are the electric vehicle sector, energy transition initiatives like renewable energy projects, and increased automation. These sectors rely heavily on copper due to its excellent electrical conductivity, making it a critical material for building sustainable and efficient modern technologies.
Graeme Train is the head of metals analysis at Trafigura, which is based in Switzerland. He predicts that electric vehicles alone will account for one-third of the projected 10-million metric tons increase in copper usage. Another third of copper demand is likely to come from the expansion in electricity generation, transmission, and distribution sectors. The remaining demand will come from other advanced applications, including manufacturing capital expenditures, automation technologies, and cooling systems in data centers, which are growing due to the rise of AI.
This anticipated growth is already being seen in certain global markets, particularly in China, where there has been a notable increase in the production of electric vehicles and solar panels, as well as in infrastructure development. These activities have boosted copper demand not only in the power sector but also in construction.
The copper market is currently experiencing a shortage in supply, which has led to a surge in copper prices, reaching a two-year high, and approaching $10,000 per ton on the London Metal Exchange (LME). One of the reasons behind this price increase is the significant decrease of over 35% in the copper stocks held in LME-registered warehouses since October of last year.
Moreover, the shortage in supply has further worsened due to disruptions in copper mining, particularly the closure of First Quantum’s Cobre mine in Panama last year. These developments have resulted in analysts revising their forecasts for the copper market continuously, with some predicting substantial shortages of around 26 million tonnes for this year.
Train also highlighted the disparities in copper consumption per capita across different regions, which may indicate potential areas of growth. For instance, India’s copper consumption per capita is only half a kilogram annually, which is significantly lower than China and the developed world, where consumption per capita is 10 kilograms and 7 kilograms, respectively. This disparity suggests considerable potential for growth in copper demand as countries like India continue to industrialize and urbanize.
The rise in copper demand caused by technological advancements and initiatives towards clean energy presents various challenges and opportunities for the global copper industry. On one hand, it requires efficient resource management and increased production to meet the growing demand. On the other hand, it offers significant economic prospects for mining companies and countries that have abundant copper resources.
Moreover, these developments have substantial implications for environmental policies and energy efficiency standards. Stakeholders must balance the increased usage of copper with sustainable practices to ensure minimal environmental impact.
The projected surge in copper demand, driven by technological innovations and global transitions towards sustainable energy sources, indicates a transformative period for the copper market. This transformation will likely require coordinated efforts from industries and governments to ensure that copper supply can meet the rising global demand while adhering to economic and environmental sustainability principles.
Source: Mining Weekly
