The world cannot decarbonise without copper, a key component of electrification. Amid efforts to secure minerals for the energy transition and achieve climate goals, demand is set to surge. We estimate that demand for copper will grow by 75% to 56 million tonnes (Mt) by 2050.
Meeting this demand will require major investment. And while the scale of the investment required in new mine supply is well understood, the implications for the downstream processing (smelting and refining) and semi-manufacturing of copper are being overlooked. Currently, China dominates both these sectors.
At the same time, nations such as the US also seek supply chain diversification away from China. Legislation such as the Inflation Reduction Act (IRA) aims to subsidise supply chain investments in the US. Meanwhile, critical minerals strategies in Europe, Australia and Canada that now include copper lean toward supporting mineral extraction and the circular economy. […]
China Continues to Dominate Copper Supply
The US introduced a critical mineral strategy in 2017 that has not yet succeeded in reclaiming material market share in the copper supply chain.
Rather, China has continued to dominate investment in the supply chain over the past five years. It has invested nearly half of the US$55 billion committed to new copper mine supply since 2019, primarily in overseas projects.
In smelting and refining, China has added 97% of global capacity, amounting to more than 3 Mt of production and nearly US$25 billion in investment. Since 2000, China has accounted for 75% of all global smelter capacity growth. […]
Mining companies now face a decision. They can squeeze out inefficient capacity but present China with more market share, or they can accept less attractive terms with some smelters outside China, but potentially embed market inefficiencies.
Annual contract TCRC negotiations will begin later this year and the outcome will be telling for the direction of the industry.
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