The price of copper has been rising steadily since March 2020.
The reasons for this reversal – prices had been falling for the last decade – are many and varied but the ‘energy transition’ is playing its part.
The world must decarbonise the way we create the energy we need if we are to avoid further damage to our climate. This means finding different energy sources whilst developing new ways of storing and delivering it to people and businesses.
Sources of new energy (which include solar, wind, geothermal, hydrogen and hydro) are rarely found close to consumers and hence energy efficiency, new transportation infrastructures and smart grids will all be part of the solution.
With more and more countries committing to lower greenhouse gas (GHG) emission targets, how can the red metal support a green revolution?
Electrification is key to the success of the energy transition: from production, to delivery, to consumption, the entire chain needs to reduce or remove carbon emissions.
Storage using industrial-sized batteries will need more cobalt, nickel and lithium and the demand for more copper and aluminium, two metals that can provide the conductivity, lightness and strength needed for transmission of electricity, will only increase.
Location, location, location
Renewable sources of energy such as wind and solar are often located far from the consumption of their end-product. Offshore wind farms can be many miles out to sea and because of the area that solar farms can cover they are often out of town where the land is cheaper.
Transporting the power these sources create will mean a huge increase in the amount of cabling needed: BloombergNEF forecasts that by 2050, the worldwide grid will have grown by thirty million miles. That’s 750 times around the equator!
The amount of additional mining that is going to be needed may yet to have been fully considered.
In his keynote presentation at this year’s CRU World Copper Conference Robert Friedland, Founder and Executive Co-Chair of Ivanhoe Mines tried to make the point by saying “You shut down all that hydrocarbon production. The [current worldwide] hydrocarbon production would be as big as the city of Singapore. And the mining business is as big as my hand-phone in comparison. So, the disruption is just not understood.”
This suggests that whilst the ‘transition’ has started, it will be some time before oil and gas is completely replaced.
In many countries, national electricity grids – a network of transmission cables and power transformers – are over one hundred years old. They are engineering success stories, but their centralised, one-way delivery models are outdated.
Politics can also play its part: to avoid federal regulations, the power grid that supplies the state of Texas is not connected to the USA National grid!
The implementation of electric and thermal smart grids, that will allow for communication between consumers and providers and that are able to manage widely distributed and variable energy supplies, is considered by many to be a crucial energy transition infrastructure project.
Given that copper is the best conductor of heat and electricity (outside of the precious metals) this means that demand will continue to increase.
More renewables, more copper
The increased need for this versatile element created by all of the new and emerging energy transition technologies, led Forbes to predict that the US alone needs to spend US$525 billion on copper, over the next fifteen years.
If this prediction comes to pass, then new ways of finding, refining and transporting this ever-more precious metal, will need to be developed. It would be counter-productive if a key element of the energy transition was a net contributor to GHG emissions.
But pressure from the public and governments is influencing the choices funders of exploration are making and hence the behaviour of the explorers. The implementation of Environmental, Social and Governance (ESG) criteria has already forced mining companies to change the way their activities are powered and operated.
So, it maybe that the reports of the death of copper have been greatly exaggerated and as the world understands the need for a diversification of energy sources that rely upon the very latest technology, it will be an element that has been used for millennia which is found at the heart of the energy transition.
Getech. Accelerating the Energy Transition