Climate change: S&P says shortfall ahead for copper and could derail decarbonisation globally, unless production is expanded hugely

Shortfall could rise from 1 million tonnes in 2025 to as high as 9.9 million tonnes in 2035, if operating rates of mines and refineries remain at last year’s 81 per cent

Substitution and recycling will not be enough to meet the demands of EVs, power distribution infrastructure and renewable power generation, report says

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About 83 kilograms of copper are used in an average pure electric car, nearly four times that in a conventional one and double that of a hybrid model, according to International Copper Study Group. Photo: Bloomberg

Published: 12:00pm, 14 Jul 2022Updated: 4:36pm, 15 Jul 2022

A chronic supply gap in copper, a metal essential to electrification and energy transition globally, could emerge in a few years and threaten efforts to fight climate change through decarbonisation, S&P Global said.

The shortfall could rise from 1 million tonnes in 2025 to as high as 9.9 million tonnes in 2035, if the operating rates of mines and refineries remain at last year’s 81 per cent, the US-based financial and commodities information provider said in a report published on Thursday.

The gap in 2035 could amount to a fifth of the demand needed for the world to achieve net zero emissions by 2050. This, scientists say, is required for reaching the Paris Agreement’s goal of limiting global warming to 1.5 degrees Celsius by 2100 to avert disastrous climate change effects.

“Substitution and recycling will not be enough to meet the demands of electric vehicles [EVs], power [distribution] infrastructure and renewable [power] generation,” S&P said. “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.”

These findings are significant because about 83 kilograms of copper are used in an average pure electric car, nearly four times that in a conventional one and double that of a hybrid model, according to International Copper Study Group, an inter-governmental organisation. Moreover, EV and low carbon power generation-related copper demand could jump nearly five times to 6.5 million tonnes by 2035 from 2020, and make up 15.3 per cent of total copper consumption, according to Wood Mackenzie, the London-based energy and commodities consultancy.

Even in a “high ambition scenario”, where high prices induce a record high production capacity utilisation of 96 per cent, a shortfall of 1.6 million tonnes is expected for 2035, the study said. Global refined copper demand is forecast to nearly double to 49 million tonnes in 2035 from last year. This best-case scenario will also see global refined copper output grow at an average annual rate of 4.7 per cent to 47.3 million tonnes in 2035, from 25 million tonnes last year. By contrast, output of just 33 million tonnes is expected if plant utilisation is not lifted.