Copper's Unique Properties

Copper's exceptional malleability, low electrical resistance, and high thermal conductivity render it an ideal choice for various applications. These characteristics make it perfect for wiring, enabling flexibility without breakage, and enhancing efficiency due to its low resistance. Moreover, copper's thermal properties are advantageous for high-temperature electrical systems, such as electric motors and generators, allowing it to maintain efficiency even under heat. As a result, copper is extensively utilized in electric vehicles (EVs), wind turbine generators, nuclear power plants, energy grids, grid-scale batteries, and Direct Air Capture systems. Additionally, its corrosion resistance and malleability make it an excellent material for securely encasing nuclear waste.

The Challenges of Expanding Copper Mines

You might wonder if expanding existing mines could solve this shortage. However, increasing output from current mines involves digging deeper to access more ore, leading to heightened complexity and significant ecological risks, such as increased heavy metal contamination in water supplies. Additionally, there are political challenges related to labor rights, local governance, and conservation efforts. These factors render mine expansion both difficult and costly.

Consequently, mine owners are reluctant to initiate expansions without significantly higher copper prices, which could take years to achieve. This delay means that current mines will likely be unable to keep pace with demand for the foreseeable future.

New Copper Mines: A Double-Edged Sword

Opening new mines could theoretically alleviate some pressure, as they are often simpler and more profitable to establish than expanding existing operations. In fact, 65% of all potential copper mine sites are classified as "greenfield sites." However, developing new mines comes with its own set of challenges, including lengthy development timelines, environmental impact, and potential harm to indigenous communities.

A case in point is the Oyu Tolgoi copper and gold mine in Mongolia, which was identified by the Soviet Union in the 1990s. Despite starting commercial exploration in 2003, development was significantly delayed due to concerns from local communities about water contamination and ecological damage. After years of negotiation, the mine began operations in 2010, but it will not reach its full capacity of 500,000 tonnes per year until 2028. This lengthy process exemplifies the challenges faced by new copper mines.

The Demand-Supply Gap

To meet the increasing demand for copper, analysts estimate that we would need around 12 mines of Oyu Tolgoi's scale operational by 2031. However, such a scenario is highly unlikely, as there aren't enough sites of that size, and the ecological and humanitarian challenges typically associated with new mines will delay their establishment.

According to BloombergNEF, the demand for refined copper is expected to rise by 53% by 2040, while mine supply will increase by only 16%. Doug Kirwin, an independent consulting geologist, has stated, "There’s no way we can supply the amount of copper in the next ten years to drive the energy transition and carbon zero. It’s not going to happen."

Potential Solutions and Economic Realities

So, is there a remedy for this impending crisis? There is a possibility, but it may not be well-received. Analysts suggest that if copper prices could elevate from their 2022 level of $8,797 per tonne to $15,000 per tonne, the supply-demand imbalance might be addressed. Such a price increase would make it financially feasible to expand existing mines and expedite the development of new ones.

In the coming decade, we may witness a surge in copper prices, potentially stalling our progress toward a more sustainable future, as the costs of wind turbines and electric vehicles could become prohibitively high. Although this price increase could eventually lead to a resolution in the copper supply issue, it may take over a decade for production to catch up with demand, significantly hindering our climate initiatives in the meantime.

Unfortunately, there isn't a silver lining to this situation. This copper crisis represents a significant obstacle to the advancement of climate technology, and currently, there appear to be no straightforward solutions.

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