The Copper Market in Transition
In the meantime, this raw material, which is required significantly for the energy transition, has even been included in the EU’s “list of critical raw materials”. The term “critical raw materials” is used in case of high economic relevance and concerns about supply risks at the same time. Whilst future supply risks are being discussed on one side, the market requirements for the red metal are increasing on the other. Quality characteristics and quality standards, which have characterized copper purchasing for many years, are now being extended by sustainability factors. This changes the market requirements for the raw material and influences purchasing decisions and strategies in a new way. Is the availability of “sustainable” copper high enough to meet the demand required for the energy transition? There could be tensions between new market requirements and sourcing risks.
“Sustainability” will change the Copper World
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.
Given the risks of sourcing described above, the question is how to set the course in the copper market in the event of a bottleneck situation. Will a lower CO2 footprint for copper be pushed further or will the society accept higher CO2 emissions from copper in order to accelerate the energy transition and support the future reduction of CO2 emissions afterwards?