Copper: Key to the Energy Transition and Challenges in Its Future Supply

In a world moving towards electrification and sustainability, copper has emerged as a fundamental metal, marking the beginning of what many have started to call the "new Copper Age." From its use in communication cables to its presence in electronic devices, this metal has been the beating heart of the technological and energy revolution we are experiencing. With increasing demand and a central role in the transition to cleaner energy sources, copper is not only essential; it has become a coveted resource for the world’s economies. Over the past decade, copper usage has skyrocketed, driven by the need for more electricity to power modern technology. According to the International Copper Association (ICA), the metal is crucial for almost all technical innovations we now consider commonplace. From the telegraph to 5G networks and electric vehicles, copper is an omnipresent component. Juan Ignacio Díaz, president of the ICA, emphasizes that copper is surpassed only by silver in terms of electrical conductivity, making it indispensable across a wide range of applications. Luis Janeiro, an expert from the International Renewable Energy Agency (IRENA), warns that the proportion of electrical energy we use must significantly increase to meet international climate targets. Currently, around 20% of our energy comes from electricity, and this figure is expected to rise to 51% by mid-century. This, combined with the transition to cleaner technologies, will make copper an even more vital resource. In fact, it is estimated that two-thirds of the technologies needed to achieve climate goals depend on copper. However, this growing demand is not without challenges. The need for copper is expected to reach 28 million metric tons this year and exceed 50 million by 2050, posing a serious supply issue. According to McKinsey, historical demand has grown by 2% to 2.5% annually, but this figure is anticipated to increase at a rate of up to 3% in the coming years. The lack of viable substitutes for many copper applications complicates the landscape further, as aluminum, although sometimes used as a replacement, cannot match copper’s conductivity. As copper production faces shortages of deposits and extraction difficulties, some experts predict a critical gap between supply and demand. S&P Global has warned that if this situation is not addressed, the deficit could reach 10 million metric tons by 2035, drastically affecting supply chains and efforts to decarbonize the economy. This scarcity has been exacerbated, in part, by the lack of new significant deposit discoveries, with only 14 findings of over 500,000 tons in the last decade. Mining companies are racing against time to secure supply. While identified copper resources are sufficient to meet future demand, the lack of investment in new projects and rising extraction costs complicate matters. To ensure a steady supply, an estimated $300 billion in investments will be needed over the next decade, of which only 40% has already been approved. The market environment has also presented additional challenges. Copper prices have reached historic highs, surpassing $11,000 per ton, driven by production cuts and increased demand in China. This country, which consumes 50% of the world’s copper production, has been stockpiling inventories at a time when they would normally be decreasing. This behavior has created uncertainty and speculation in the markets, highlighting China’s importance in the global copper landscape. The future of copper is not only a reflection of trends in the mining industry but also an indicator of the state of the global economy. Known in the jargon as "Doctor Copper," this metal has become a thermometer measuring economic health and the capacity to move towards a more sustainable future. The energy transition and digitalization largely depend on copper, and every challenge faced by this metal reflects the complexities of the modern economy. In conclusion, as the world rushes towards an electrified and sustainable future, copper emerges as a critical resource that will be both a driver of innovation and a logistical challenge. From its use in green technologies to its role in developing digital infrastructure, copper is not only the metal of the present but also the pillar of the future. However, its growing demand and supply difficulties require immediate attention if we are to ensure that this essential metal continues to fuel the progress of our society.