The high complexity in context of copper releases and tolling agreements was a real challenge in developing the report. In contrast to the traditional supply chain, in which the raw material is delivered directly from the supplier to the customer, in the tolling business may appear several upstream producers between us and the purchasing customer. The copper purchased from Südkupfer is generally not delivered directly to the customers, but is allocated to their upstream producers. The inflow of the material is documented on a so-called “copper account”. The upstream producer can either make the copper account balance available to another upstream supplier by releasing it from the account or have the copper physically delivered. This process can be continued as often as required. Tracing all releases and physical delivery processes are exclusively possible at the end of this chain by help of an IT-supported algorithm.

Südkupfer delivers copper cathodes to several upstream producers in the supply chain continuously. These copper cathodes originate from many different cathode producers who manufacture their own brand, so-called “copper cathode brands”. The cathode brands provide information of the origin and the quality of the cathode to the processor, for example. Some manufacturers publish information on the recycling content and PCF of the cathode brands on top. We went into this in more detail in last year’s story already. Südkupfer has to take additional factors into consideration when supplying cathodes: For quality reasons, some upstream suppliers require a ‘cathode mix’ defined for their production process. They use a brand list to determine which cathodes are accepted and which are nonaccepted.

The key figures regarding emission factors and the proportion of secondary material can vary greatly from cathode brand to cathode brand. In this context it is useful to have a look at the emission factors for copper cathodes published by the Federal Office of Economics and Export Control. It shows an average PCF of 6,658 kgCO2e/tonne of copper cathode¹. Another calculation for a global average value is published in a study by the International Copper Association (ICA). The result of the ICA-analysis is a value of 3,965 kgCO2e/tonne of copper cathode². The ICA’s figure is significantly lower, as the study was based exclusively on data from ICA members.

The ICA approach is more suitable for Südkupfer’s PCF reporting as our supplier base is well covered by the ICA. For cathode brands whose PCF has not yet been published or if the brand is unknown, our system takes the ICA average. For all other cathode brands, the PCF published by the cathode manufacturer is calculated. Our investigation resulted in an average PCF of 2,756 kgCO2e/tonne of copper cathode for 2022 regarding the copper cathodes purchased by Südkupfer during this period.

However, with our PCF report we intend to offer the highest level of transparency to our customers. We do not content ourselves with calculating and publishing just the average PCF, but track the PCF of each customer individually according to the releases made in the reporting quarter. Therefore, our customers receive a report on an average PCF and a recycling rate that reflects their individual supply chain per quarter. Depending on the release-practice of the customers or their upstream suppliers, the PCF and recycling rate can fluctuate quarterly.

The evaluation process starts with tracking which cathode-brands and volumes have been delivered by Südkupfer to the several cathode-processing upstream producers in the respective quarter. On this basis an average value can be calculated. In a second step, it is possible to track how much copper has been released by each customer from the upstream suppliers by tracing the customer’s release-orders in the relevant period. The average PCF and the average recycling rate are redistributed to customers depending on the quantity released then. An average value is calculated on this basis again. This process continues until all of the customer’s releases are mapped.

Thus, the physical supply chain of copper cathodes is pictured as accurately as possible. Our customers receive the PCF and the recycling rate of the copper that was delivered in their physical supply chain. We must point out that this procedure only covers the copper purchased by Südkupfer. Südkupfer has no influence on the PCF and recycling rate of the material that is used in fact by the upstream producer in its production process.

Some cathode manufacturers differentiate between regular and special copper cathodes. The special products have better characteristics in terms of CO2 footprint and recycling rate. A surcharge on the cathode premium must be paid for these special products generally. As a return service the customer receives a certificate attesting the purchase of a particularly ‘green’ cathode. The use of ‘green copper’ cathodes is not included in the calculation of Südkupfer’s PCF report. This is due to the customer receives the certificate from the manufacturer directly and the better values should benefit the buyer straight. That means that an average is announced for the regular cathodes and the buyer of ‘green copper’ cathodes can also offset the certified value of these special cathodes in a next step. This ensures that PCF and recycling rate of the ‘green copper’ cathodes have a direct impact on the buyer’s individual calculation.

“When we first heard about the new SÜDKUPFER Customer Platform, we were quite intrigued. We were told it was something entirely new, user-friendly, and very easy to use. After registering, we were immediately impressed by the ‘cockpit’ – a central place where we can effortlessly manage the copper account balance, planned releases, open orders and invoices, as well as orders for price fixations and releases.

The digital copper account and the ability to download documents simplify the daily handling of our copper transactions – around the clock. Everything we need is available with just one ‘click,’ and the simple user guidance provides very easy handling. The customer platform is indispensable in our daily work with SÜDKUPFER – allowing us to efficiently manage our copper transactions. It’s a great example of successful digitalization that puts the customer at the center.”

“We are incredibly proud of our customer platform. With the customer platform, we have fully achieved our goal of simplifying our customers’ day-to-day business and created a transparent, user-friendly, and secure system. The entire story behind the customer platform consistently embodies our business philosophy – always focusing on the needs of our customers. The customer platform quickly established itself in the daily operations of many of our customers, showing that digitalization can create real added value!”

Get ready to take your copper transactions to a new level!

The success story of Partzsch Spezialdrähte with the new SÜDKUPFER Customer Platform is just the beginning. The constant evolution of technologies allows us to continuously expand and improve the customer platform. Future updates will aim to further enhance efficiency, making your daily work even more comfortable. Whether you work in a small to medium-sized enterprise or a globally operating company – we’ll provide you with features that optimally support your copper transactions!

In the meantime, the megatrend “sustainability” has become an integral part of our society. In fact, it has come to stay. The United Nations established this trend with the announcement of the 17 “Sustainable Development Goals” (SDG) in 2015. The outlined goals forced the implementation of national strategies, which are reflected in our present and future laws and market requirements. Examples of the increasing legal and regulatory requirements for companies in Germany are the EU Conflict Minerals Regulation, the Supply Chain Act (German: Lieferkettensorgfaltspflichtengesetz (LkSG)) or the Corporate Sustainability Reporting Directive (CSRD). It’s a fact – the course for sustainability has been set and will shape our society as well as the economy.

Although the increase in regulatory requirements and new market conditions are very challenging for the copper business, these changes offer great opportunities, especially due to the upcoming decarbonization of the energy sector. Either electric vehicles or wind turbines: the energy transition will require high volumes of the industrial metal. The primary target is to achieve CO₂ neutrality by 2050. The way to CO₂ neutrality thereby pays entirely to SDG 13 “Climate change mitigation and adaptation”. Even though copper is essential to achieve CO₂ neutrality, it shouldn’t be forgotten that the electrolysis process in copper production is very CO₂ intensive. This leads to a kind of conflicting targets. In order to resolve this conflict as best as possible, many cathode manufacturers have committed themselves to sustainability. The CO₂ emissions per ton of copper, the so-called “Product Carbon Footprint” (PCF), is included in the sustainability reports of numerous copper producers already. While the global average CO₂ footprint for one ton of copper is 4 tons CO₂ equivalent (CO₂e), the sustainability report of Germany’s largest copper smelter Aurubis shows a PCF of 1.46 tons CO₂e per ton of copper cathodes. According to the report, this figure has decreased by 36% since 2013. The german company aims to achieve climate neutrality before 2050.

Effective methods to further reduce these figures are the use of green electricity and the use of recycled materials. Copper can be recycled any number of times, that turns the recycling process into the ultimate tool for improving the CO₂ footprint. In this way, producers are able to optimize the energy-intensive process from mining to the electrolysis process. A good example is the PCF of the cathode production at Montanwerke Brixlegg. The Austrian recycling company uses recycled copper to produce cathodes and achieves an exceptionally low PCF of 0.739 tons of CO₂e per ton of copper cathodes. In Germany half of the demand is currently covered by recycled material. However, given the threat of supply problems for the upcoming energy transition, the capacity of recycled copper is far away from being enough to cover the total demand.

With all these efforts, there is no way around copper, because copper is found everywhere where electricity is transmitted. Accordingly, the demand will be great in the future to further advance and expand the megatrends of decarbonisation, e-mobility and digitalisation.

According to a market analysis by the financial services provider S&P Global, the expansion could be delayed due to the limited availability of the industrial metal. Solar power plants require twice as much, offshore wind power plants up to five times as much copper per megawatt hour as classic power plants.

“The energy transition will be much more dependent on copper than our current energy system,” Daniel Yergin, vice chairman of S&P Global, told US broadcaster CNBC.

In its report, S&P Global forecasts that annual global copper demand will almost double to 50 million tonnes by 2035 and that this demand will even reach more than 53 million tonnes by 2050.

Cumulatively, the copper consumption of the next 28 years would exceed the total copper consumption of the last 120 years. With the conversion from fossil to renewable energy sources, the required quantities multiply very quickly.

Last year, the investment bank Goldman Sachs even ushered a new era in its study, calling copper the new oil – “no decarbonisation without copper”. Goldman Sachs expects that the demand for wind turbines alone will account for 20% of the copper demand from renewable energies. Electromobility will require up to 40%, mainly for charging infrastructure and motors.

The Berenberg bank takes a similar view and even spoke of a super-cycle for industrial metals in the coming decades, triggered by decarbonisation.

The recent price slide of 35% is therefore likely to be only a snapshot, as the fundamental demand drivers will remain in place in the future.

If the demand for copper is set to double by 2035, what about the supply?