The global economy is fueling an increase in the demand for copper and cobalt, as per experts at Afriforesight’s recent webinar titled “Cobalt and Copper: African Opportunities.” The event, held on July 10, included discussions on the demand for these minerals, their supply implications, and price forecasts.
Kirthi Ramdhanee, Afriforesight’s chief sustainability engineer, emphasized the increasing demand for copper due to its crucial role in electrification, battery technology, renewable energy, and water infrastructure. She noted that urbanization in emerging economies is a significant factor. As developing countries expand their power grids and advanced economies modernize infrastructure, the demand for copper is expected to increase.
“Renewable power generation and battery technology are also driving copper demand as the world shifts towards green energy,” Ramdhanee said.
She emphasized that the transition to electric vehicles (EVs) is a major demand driver. Fully electric cars use up to five times more copper than conventional vehicles. Copper is essential for EV batteries, electric motors, and cables.
Moreover, the expansion of EV charging networks will require substantial copper cabling. However, Ramdhanee warned of a potential copper supply gap by the late 2020s if current mining, recycling, and consumption rates persist. She noted that recycled copper alone would not suffice to meet the growing demand.
To address this, miners are encouraged to start new copper mines or expand existing operations. The looming copper deficit is expected to drive up prices, further incentivizing increased production. Governments may shorten permitting cycles and adopt friendlier policies to attract investment in copper mining.
Approximately 35% of the global copper supply comes from South America, where production has been on the rise. However, slower supply growth due to stricter regulations and water scarcity presents an opportunity for Africa to gain market share. Ramdhanee highlighted the Democratic Republic of Congo (DRC) and Zambia as key players in increasing copper production.
In the DRC, production is expected to rise as existing projects expand and new ones begin. However, challenges such as inadequate transport infrastructure and logistical issues could limit mining activities. Meanwhile, Zambia is addressing hydropower supply disruptions by investing in solar power and other renewable energy sources.
As copper prices rise, overall production is expected to increase to meet the growing demand. The forecast for copper prices is positive, supported by the rising need for electrification in both developing and developed countries. The expansion of electrical grids and the demand for EV charging networks are significant factors.
On the cobalt front, Afriforesight’s base and battery metals analyst, Hannah Frösler, noted that the battery sector is the largest driver of cobalt demand. Cobalt is a key component in the cathode of some lithium-ion batteries used in EVs and portable electronics.
“EVs will significantly contribute to cobalt demand this year and in 2025,” Frösler said. However, efforts to replace cobalt in batteries with more ethically sourced and environmentally friendly materials are ongoing.
In the near term, global automotive and electronics demand remains weak due to high interest rates, discouraging consumer spending. These rates, along with softening EV sales targets in the US and EU, are expected to slow EV adoption.
Despite this, demand for EV batteries is projected to increase over time. However, the transition may be slower than initially anticipated due to softened EV sale targets and tariffs on Chinese products by the US and EU. This slower uptake could delay the shift from internal combustion engines.
Frösler indicated that a cobalt supply deficit might occur by the late 2020s if current mining rates continue. While demand for cobalt is expected to rise, it will be limited by the shift away from cobalt-containing batteries. The current supply surplus is projected to continue this year but should ease by 2025 as demand increases.
The DRC accounted for about 74% of global cobalt supply in 2023. Despite weak prices, DRC supply is expected to grow. High copper prices and promising future demand are likely to support cobalt supply.
Indonesia, the second-largest global cobalt supplier, is also expected to increase its output. However, some nickel producers have reduced or suspended production due to low prices, potentially constraining cobalt supply in the near term.
These supply limitations create opportunities for the DRC to boost production. However, power and logistical challenges could limit supply. Additionally, cobalt mining faces various social issues, driving the shift away from cobalt in batteries.
Many mining companies are committed to complying with environmental laws, suggesting that supply in the DRC will rise. Cobalt prices are expected to trend downwards this year due to weaker-than-expected EV demand growth and rising supply from the DRC and Indonesia.
However, prices should rise as EV demand improves, driven by government and automaker incentives to meet emission targets. Nevertheless, demand growth may be capped by efforts to replace cobalt in batteries with more ethically sourced materials.
Source: Mining Weekly
