The Copper Market in Transition

The Copper Market in Transition

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?

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Copper – indispensable for the energy transition

The energy transition is accelerating

Even before that, the climate crisis led to a greater expansion of renewable energy production. The Ukraine war is now acting as an additional accelerator of this development. Many countries and companies are massively increasing their investments in renewable energies in order to become climate-neutral and energy self-sufficient in the near future. In order to become independent of russian gas and oil more quickly in this country, the output of wind energy plants is to double in the future, that of solar plants even quadruple.

By 2050, Europe is to become the first continent to emit only unavoidable greenhouse gases and to completely offset these few emissions in order to achieve a global temperature increase of as little as possible below 1.5 degrees.

Copper demand is likely to increase exponentially in the future.

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.


Copper deposits and availability

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

Copper deposits, unlike many other commodities, are spread across the globe and can be found in over 20 countries. According to the International Copper Study Group (ICSG), the largest producing countries in 2019 were Chile, Peru, China and the USA. Other significant deposits are found in Australia, Indonesia, Russia, Canada, Zambia, Poland, Kazakhstan and Mexico.

Global copper reserves are currently estimated at around 870 million tonnes. According to data from the US Geological Survey, global copper resources total 5,000 million tonnes. In addition to existing reserves, these include discovered and potentially profitable deposits as well as undiscovered deposits predicted on the basis of preliminary geological surveys.

In addition, 35% of the demand is currently already covered by recycled copper. Every wind turbine and every cable is therefore a potential source of copper for the future.


Driven by the megatrend of “decarbonisation” and the energy transition, it can be assumed that the copper demand will increase exponentially in the coming years. It is true that copper deposits are available globally on a large scale. However, the question will be whether extraction possibilities and capacities can keep up with the growing demand.


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Copper as an all-round metal

What is copper used for?

Copper is mainly processed in various electrical installations, e.g. in cables, wires, conductor boards, batteries or electrical appliances. This accounts for 57% of the total 1.2 million tonnes of copper in Germany. A further 15% is used in the construction industry, mainly for installation pipes or as facade cladding. 9% is used in the automotive sector, 8% in mechanical and plant engineering. Only 5% goes into traditional trade. Copper is also used in door locks, fittings, musical instruments, coins or bells. Copper is therefore a real all-round talent.

Hardly any other raw material has been processed more frequently in human history than the red metal, which was already known in the Stone Age.

A rapid increase in copper demand is expected due to the production of electric vehicles. At the moment, most passenger cars contain an average of 25 kg of copper. For electric cars, however, carmakers will need up to 80kg in the future (according to the mining group BHP Billiton). Experts even expect the demand to grow by up to 340% by 2050.

However, if the demand for the popular industrial metal continues to grow so significantly, neither the reserves mined by now nor the actually known resources, will be able to meet the demand. One way to prevent this shortage is to conserve resources through recycling.

Copper can be recycled without any loss of quality.

Recycling conserves resources, reduces environmental impact and saves energy. Copper is probably the most recycled material in the world because the metal can be reprocessed without any loss of quality. Mankind therefore does not consume copper – it uses it. Theoretically, all the copper that has ever been mined can be used forever. The trade with scraps, used material for copper and copper alloys is a well organised market since many years. However, according to the United Nations Environment Programme (UNEP), the global recycling rate is only 50%.

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