Net-Zero Targets Could Double Yearly Copper Demand By 2035

Authored by Sohrab Darabshaw via Metal Miner,

The global demand for copper is projected to increase by 40% by 2040, driven by the adoption of green technologies.

Vedanta Resources has regained control of the Konkola Copper Mines, a major high-grade copper deposit in Zambia.

The Cobre Panama mine closure and reduced output from Chinese smelters have contributed to concerns about a potential copper shortage.

By now, the world knows that although the current global copper reserves are sufficient to meet demand, extraction continues to lag behind consumption.

As a result, many inside and outside the copper market fear there will be a shortage in the coming years. 

Predictions say that the annual global demand for copper will increase by about 40% by 2040.

There are multiple factors fueling this expected growth, including the global move toward renewable energy and sustainable transportation.

Given this current environment, any developments around copper and its mining remain guaranteed to hit the headlines. 

Reclaiming an Essential Asset in the Copper Market 

Analysts watched from the sidelines for months as the Anil Agarwal-led Vedanta Resources Holdings Limited tried to regain control of the Konkola Copper Mines (KCM) in Zambia, Africa. That was before news arrived earlier this week that the global conglomerate had fulfilled its commitment under the “KCM scheme” of arrangement through a payment of U.S. $245.75 million.

With this move, the copper market could see the immediate reinstatement of KCM’s Board of Directors and the restoration of full management control to Vedanta. This critical step is necessary for Vedanta to boost production and fully unlock KCM’s potential.

KCM boasts copper grades over 2.4%, placing it among the world’s largest high-grade copper deposits. Moreover, the mine also has about 400 kt of contained cobalt reserves and resources, meaning KCM can become a top cobalt producer. As per media reports, Vedanta hopes to push copper production at KCM to 300 ktpa and hike cobalt production from 1 ktpa to 6 ktpa through enhanced production capabilities. 

Global Copper Supply Remains in Doubt  

Vedanta spent the past five years actively pushing to take full management control of the  KCM mine. However, the Zambian Government forced the copper mine into liquidation in 2019 after President Edgar Lungu accused it of failing to increase copper production.

Commenting on the development to LiveMint, Chairman of Vedanta Group Anil Aggarwal said copper was the metal of the future. According to him, the Government of India wanted to secure a copper supply line for its own internal consumption. Incidentally, India has significantly limited domestic production, making it dependent on imports. According to a report by India’s Commerce Ministry, India imported copper plus copper articles worth $12 million in FY23 alone. 

One significant event that impacted copper market dynamics was the closure of the Cobre Panama mine, a major global copper source. This closure altered market expectations from a surplus to a deficit, thus driving copper prices higher.

Green Tech Continues to Fuel Copper Demand Predictions 

Moreover, Chinese smelters decided to reduce output back in March due to a concentrate shortage, further increasing prices. Because of the feared upcoming shortage, copper miners globally foresee closer collaboration with end users, ranging from carmakers to utilities, which could help transform a previously fragmented supply chain. 

According to this report, the change mainly revolves around copper’s importance in green technologies, which will likely only increase in the coming years. In fact, there’s an emerging trend involving some mining companies trying to sign direct deals with cable manufacturers, automotive companies, etc. in order to secure a steady supply of copper at an affordable price.

It may eventually come down to a situation in which anyone using copper for any purpose, be it vehicles, green energy, or charging stations, will have to understand and plan how to lay their hands on the amount of copper they require every year. 

Analysts believe that to get anywhere near net-zero targets by 2035, yearly copper demand may double to 50 MMT. Even conservative estimates predict a one-third increase in demand over the next decade, fueled by significant investments in decarbonization initiatives from both the public and private sectors. This will significantly strain copper markets in both the short and long term.