Electric cars, solar and wind farms, batteries for energy storage all need copper. According to S&P Global, an electric car needs two and a half times more copper than a car with an internal combustion engine. Solar power plants need twice as much copper per megawatt of installed capacity as electricity from natural gas or coal. In the case of an offshore wind farm, it is up to five times more.
Copper is also central to the infrastructure that ensures the transmission of renewable energy. It is used for cables, transistors and converters.
“The energy transition will be much more dependent on copper than our current energy system,” S&P Global Vice Chairman Daniel Yergin told CNBC. “Copper is the metal of electrification and is largely what the transition to new energy is all about,” he added.
The report projects that demand for copper will almost double to 50 million tonnes by 2035. By 2050, it will reach more than 53 million tons. That’s more than all the copper consumed in the world between 1900 and 2021, according to S&P Global.
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Triple demand
Renewable energy sources have a major share in the increase in demand. S&P Global estimates that the need for copper for electric cars, wind and solar power, and batteries will triple by the middle of the next decade. Added to this will be growth in demand from other areas, which will push interest in copper to unprecedented levels.
Starting a new mining operation is not easy at all. According to the International Energy Agency (IEA), it takes an average of 16 years before a new mine is fully operational. For now, some of the higher demand can be met by increased utilization of existing mines and higher recycling.
S&P Global offered two scenarios for future development. In the worst-case scenario, which assumes that production will continue at roughly the same level, ten million tons of copper will be missing from the market in 2035. However, the market is supposed to be in deficit in the 30s even according to a more optimistic scenario, when mining increases and recycling intensifies, even if the deficit will be lower. Under either scenario, supply will not be sufficient to meet demand to achieve net zero emissions by 2050, the report said.
The S&P Global report comes at a time when copper prices are under pressure. Commodity prices generally fell on fears of a recession that could mean a slowdown in demand. On Friday, the price of copper fell below $7,000 (170,200 crowns) per ton, reaching its lowest level since November 2020. In the second quarter, the price of copper recorded its worst three-month performance in more than a decade.
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