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Copper deficit a critical destabilizing threat to international security, says S&P Global

Low inventories, combined with increasing demand due to Chinese economic stimulus and eased lockdowns to support copper prices in 2H22. Credit: Adobe Stock.

Copper scarcity may emerge as a key destabilizing threat to international security in the 21st century, an analysis by S&P Global found this week.

“Projected annual shortfalls will place unprecedented strain on supply chains. The challenges this poses are reminiscent of the 20th-century scramble for oil but may be accentuated by an even higher geographic concentration for copper resources and the downstream industry to refine it into products,” according to the report entitled ‘The future of copper: Will the looming supply gap short-circuit the energy transition?’

Copper is seen as the ‘metal of electrification’ and is essential to all energy transition plans. Despite its critical status the potential supply-demand gap is expected to be “very large” as the energy transition intensifies. Substitution and recycling will not be enough to meet the demands of electric vehicles, power infrastructure, and renewable generation.

“Unless massive new supply comes online in a timely way, the goal of Net-Zero Emissions by 2050 will be short-circuited and remain out of reach,” warned S&P in its report.

According to the firm, copper demand is projected to grow from 25 million tonnes today to about 50 million tonnes by 2035, a record-high level that will be sustained and continue to grow to 53 million tonnes by 2050. The report notes that power and automotive applications will have to be deployed at scale by 2035 in order to meet the 2050 net-zero targets.

The chronic gap between worldwide copper supply and demand projected to begin in the middle of this decade will have serious consequences across the global economy and will affect the timing of achieving Net-Zero Emissions by 2050. The shortfall is expected to reach as high as 9.9 million tonnes in 2035 in its ‘Rocky Road Scenario,’ which is based on a continuation of current trends in capacity utilization of mines and recycling of recovered copper.

“This would mean a 20% shortfall from the supply level required for the Net-Zero Emissions by 2050 target,” said S&P in its report.

“The gap arises even under assumptions of aggressive capacity utilization rates and all-time-high recycling rates in the ‘High Ambition Scenario.’ Even with these aggressive assumptions, refined copper demand will outpace supply in the forecast period up to 2035.”