Is aluminum a real threat to copper?

Copper is the major metal par excellence in terms of electrical conductivity but is not the only solution to energy transmission. 

The red metal price is flying high and with the energy transition set to pick up the baton when rampant recovery-induced demand loses steam, there seems to be no end in sight.

While aluminum’s conductivity is some 40% below that of copper it does possess attractive properties – not least its density, which is just 30% of that of copper. 

This means that an aluminum cable is around 52% of the weight of a copper cable with the same conductivity, a property offering handling, and installation benefits.  

“Too many forecasts ignore the fact that aluminum is a serious competitor to copper in a number of high volume applications, including high- and mid-voltage power cable, busbars, transformer windings and motor windings,” says Julian Kettle, Wood Mackenzie Senior Vice President, Vice-Chair Metals and Mining.

“In fact, given its lower cost, aluminum wins out against copper under virtually any realistic long-term price scenario. Only at extreme carbon tax levels does aluminum’s higher carbon tax footprint at the margin lead to copper becoming competitive at price levels that historically would have been prohibitive”

According to Kettle, even if forecasts of $15,000-$20,000 per tonne for copper prove prescient, without commensurate aluminum prices of $5,000-7,000 per tonne copper would see massive demand destruction, which would be accompanied after some time lag by supply growth.

Furthermore, prices getting anywhere near these levels would send a strong signal to the market that the industry cannot meet the challenge of the energy transition, with the result that alternatives would be sought. 

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