The world may have to rely on new recycling technologies to prevent copper shortages as demand for the metal increases due to the development of clean energy, according to a report.
BNEF analysts, including Sung Choi, wrote in a report released Tuesday that copper demand will grow 53% by 2040, driven mainly by transportation and infrastructure electrification. Over the same time frame, BNEF's base case assumes a 16 per cent increase in supply due to a shortage of new mines, resulting in a shortfall of 14 million tonnes by 2040. Even in a best-case scenario, a shortfall of more than 5m tonnes is likely.
The BNEF report sounds the latest alarm about copper supplies in the new economy, with key battery components such as lithium and nickel also likely to be in short supply. Last month, S&P Global warned of a copper supply shortage over the next decade as new mine developments become trickier and more expensive and existing mines face declining ore grades and rising environmental and social requirements.
Of course, huge shortages are hypothetical. While stable rules and streamlined licensing processes will help ensure new projects are completed on time, challenges facing the mining industry mean a shift in focus to secondary production, with recycling expected to help fill the gap.
"Investing in technologies related to recovery, cost reduction and improved recovery rates from low-grade deposits could help increase new copper supply to meet growing demand," BNEF analysts wrote.
While copper futures have recovered in recent weeks, prices are still down about 18% from their early June highs amid lingering recession fears. An economic downturn could slow copper demand growth, but it could also spur supply investment after a recession, BNEF wrote.
