The growing shortage of copper is already triggering big shifts in the industry, but one of the biggest could be direct tie ups between mines & manufacturers.
There is a lot of talk about global copper supply, but its still something of a guessing game. The Bank of America says copper supply will be 15%—something like 5M tonnes—lower than demand by 2030, forecasting demand will jump from 2% a year to 4%.
There are even bigger supply deficit forecasts out there, but I don’t think anyone can be absolutely accurate. One thing is clear is that it’s already shaking up markets.
And one of the most interesting and innovative could be the closer collaboration between producers and end users like car makers or utilities designed to make sure manufacturers have a steady, affordable source of copper.
The global copper supply chain is a bit fragmented to say the least, but recently producers are saying they’re seeing an interest from the companies who make things like wire or electric cars in tying down long term supply.
It’s still early days of course. I know of only one such deal so far between Stellantis, owner of the Jeep, Fiat and Peugeot brands, with McEwen Copper. But I suspect its just the start.
The big issue is new mines. As I’ve also talked about before, a copper mine takes an average of nearly 25 years to get up & running, and then you have to add in a country’s stability to produce without any disruptions. No longer easy.
Some are suggesting that mining companies should consolidate into “super majors” or collaborate more on major projects or new deposits. The other idea being debated is whether end users like car companies should help fund new mines to make sure they get up, something that happens with lithium, nickel and cobalt I believe.
In my experience collaboration is always good—both for the market and the consumer—and its the message we’ve been making in our Net Zero reports for some time. But working out how that happens in the copper industry will be the next big challenge.
Cheers, John Fennell