Apart from the established and diverse uses for copper in society, the metal is one of the fundamental building blocks behind the new electric vehicle transport and energy storage revolution that is upon us. Driven by widespread consumer adoption, car makers estimate that electric vehicles in use globally will reach between 40 million and 70 million by 2025. Electric vehicles use more copper than cars fitted with internal combustion engines as it is needed in the lithium-ion batteries that power the vehicles, as well as their motors, inverters and charging points. Up to 23 kg of copper is required by each combustion engine car, whereas a hybrid electric vehicle uses nearly 40 kg, and a plug-in hybrid electric vehicle 60 kg. Depending on the size of battery, an electric bus can use between 224 kg and 369 kg of copper.
Nonetheless, there are challenging macro-economic issues ahead for copper production, amidst the electric transport revolution. Demand for the metals is on the rise as more auto makers launch electric vehicles and focus on efforts to extend the cars’ driving range between charges. Building a network of vehicle-charging stations is further increasing demand.
However, the production of electric vehicles is likely to be slowed by supply constraints (Moody’s Investors Service (May, 2020).). “Declining ore grades for copper, continued lack of investment in new mines, and the time required to bring new discoveries to production will constrain metal availability and, ultimately, the metal sector’s ability to meet growing demand from battery/auto makers, particularly in the near-term” it said. Goldman Sachs (September, 2020) have a similar view: “Next year, we expect the largest refined copper market deficit (412kt) in over 15 years due to current positive demand trends. As a result, we have recently raised our copper price forecasts to $7,000/7,250/7,500/t on a 3/6/12m basis”
Currently, small deficits in refined copper and nickel are expected to increase and 1.7M-5M tonnes of extra copper will be needed annually by 2025. This substantial increase in copper demand will be a major challenge that cannot be met by simply cranking-up production from the world’s largest copper mines, some of which are more than 100 years old. Moreover, it is getting more difficult and expensive to find new deposits in politically stable jurisdictions and the time involved between a greenfield investment decision and receiving necessary permits to reaching initial production for a new copper mine is commonly 5–10 years, if not longer.
The dynamics of matching the supply and demand of copper are changing in the light of the transport and clean energy revolutions.
Source: Moody’s Investors Service (May, 2020) “Source Metals shortfall to crimp electric-car battery supply”. https://www.marketwatch.com/story/metals-shortfall-to-crimp-electric-car-battery-supply-moodys-says-2018-05-01. First published May, 2018, again in May, 2020 Claudia Assis, Moody’s
Source: Goldman Sachs (September, 2020) “Goldman’s ‘favorite’ commodity has been on a tear, and could have further to run” https://www.cnbc.com/2020/09/07/goldmans-favorite-commodity-has-been-on-a-tear-could-have-further-to-run.html. September, 2020, Elliot Smith, CNBC