Copper Industry Warns of Looming Supply Gap Without More Mines

Copper Industry

The world’s reliance on copper for building most electronic devices is set to exceed the available supply over the next decade. This imbalance could undermine climate goals unless significant action is taken to increase mining operations. The need for copper, a critical component in motors, batteries, and wiring due to its excellent electrical conductivity, has been highlighted in recent industry discussions.

Jeremy Weir, CEO of Trafigura AG, recently emphasized the urgency of the situation at the World Copper Conference, stating, “If we don’t have enough copper, it could seriously short-circuit the energy transition.” This conference, the largest gathering in the industry since 2019, served as a platform for executives and analysts to express their concerns and projections.

Solaris Resources and the Warintza Project

With all of the challenges of declining yields and fewer new discoveries in the mining industry, Solaris Resources has been highlighted as a potential solution with its Warintza project in Ecuador. This project represents the proactive efforts of junior mining companies to bolster the supply of critical minerals, crucial for technologies in various sectors, including renewable energy.

The Warintza project stands out due to its potential and the discovery of multiple mineral deposits. This development is particularly significant at a time when the global demand for critical minerals, essential for electric vehicles and renewable energy solutions, is experiencing a marked surge.

Solaris Resources also recently appointed China International Capital Corporation Limited (CICC) as its financial advisor for operations in China. CICC, a leading global investment bank based in Beijing, boasts a robust presence in the Chinese M&A market, especially in mining sector transactions. This partnership signals Solaris Resources’ commitment to exploring its options in response to multiple acquisition proposals for the Warintza Project.

Projected Supply Shortfall

Despite an expected global supply increase of 26% to 38.5 million tonnes annually by 2035, data from the International Copper Association (ICA) indicates a potential shortfall of 1.7% in meeting the demand, even with enhanced recycling efforts. This forecast highlights the critical need for new mining initiatives.

Regulatory hurdles have also led to a significant decrease in the approval of new copper mines, reaching the lowest point in a decade, as reported by Goldman Sachs. The lengthy process of permitting and building mines, often taking 10 to 20 years, exacerbates the issue. Goldman Sachs currently predicts a surge in copper demand, projecting prices to reach $15,000 a tonne by 2025, a 67% increase from current levels.

The burgeoning electric vehicle (EV) market, requiring more copper than traditional internal combustion engines, is a primary driver of this demand. However, the copper shortage could lead EV manufacturers to use less copper or even switch to alternatives like aluminum.

The Aluminum Alternative

Aluminum, while lighter and cheaper than copper, is also more corrosive, brittle, and only about 60% as conductive. It could be a viable substitute in certain applications, such as wiring for offshore wind turbines and some EV models. The Aluminum Association sees this as an opportunity for growth in the market, but copper is the most viable option for the industry and the practical applications of the green energy transition.

Although copper recycling rates are on the rise, reaching a truly “circular economy” where copper is almost entirely recycled remains a distant goal. Companies like Aurubis AG report that nearly half of their copper cathodes are made from recycled material, but achieving 100% recycling is a long-term project.

A True Need for More Mining Activity

Analysts stress that recycling alone cannot meet the escalating demand for copper. The consensus among industry leaders is clear: increased mining activity is essential to fulfill the growing need for copper in the coming years. The gap between supply and demand, if not addressed, could have significant implications for the global economy and the transition to green energy.

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.