Copper prices fell to their lowest level since November last year this week, according to foreign news May 14. However, the International Copper Study said it expected the copper market to experience a supply shortage this year.
Similarly, rafigura, the commodities giant, has warned of chronic shortages and predicted record prices for copper, without which the energy transition would be impossible. But prices are still weak, and that's a big problem.
Wind and solar installations require eight to 12 times as much copper as coal and natural gas, according to one association. Electric cars are known to require three to four times as much copper as cars with internal combustion engines.
As a result, the transition to net zero emissions will require much more copper than is currently produced worldwide.
Copper demand will double by 2035, according to S&P Global. According to McKinsey, there will be a gap of more than 6m tonnes a year between global copper demand and supply by 2031.
The ICSG said earlier this year that only two new mines would come on stream between 2017 and 2021.
It also said copper production grew much less than expected last year and will continue to do so this year. There's something wrong with copper. Copper is just one of a dozen or more metals we need more of if we are to meet our net zero emissions goal.
In the context of the latest trends in mining, these seem extremely elusive. One of them, and perhaps the most worrying, is that it currently takes 23 years from the discovery of copper to the start of actual industrial production.
That is longer than it has taken Britain and California to go all-electric in the passenger sector. That means that by 2035, there won't be enough copper for all the electric cars they see.
Just a few months ago, miners were talking about 10 years from discovery to production, but with tougher environmental regulations in the mineral-rich developed world and fast-changing regulations in the developing world, that's where the industry is now :23 years, according to Airguide, a consultancy.
The U.S. government has promised to speed up the issuance of mining permits, but even if it does, there are some activists to consider. The activists may love wind and solar power, but they seem to prefer nature. They have also proved they can block new mines.
What's more, this activism is evolving, and now commentators have coined a new term to replace the "not in the backyard" sentiment prevalent among activists and ordinary taxpayers.
Previously, junior miners found a resource, proved it and then either raised more money to develop it or passed the baton to one of the big players. Now junior miners are facing a shortage of project leaders, while the big miners are reluctant to invest in new discoveries. Because the price does not reflect the fundamentals of copper.
Perhaps it is only a matter of time before copper starts to reflect fundamentals rather than follow China's economic reports. Indeed, copper has a special status as a bellwether, its price widely seen as indicative of the direction of any economy. Weak copper prices usually reflect weak economic growth, and vice versa.
However, copper's key role in the energy transition should have added a vector to price setting.
In fact, governments are not the quickest to act unless things are really bad, as we saw in the EU last year. But this time, governments are leading the surge in demand for metals and minerals. They are really talking about encouraging more mining.
