Reference News Network, November 15 report - According to the Spanish website "ABC" on November 10, the industry has warned that copper supply issues will affect energy and technological transformation.
In the wave of global electrification and new technology development, metals have become strategic materials in the short, medium, and long term, especially copper. This mineral, which is experiencing a supply crisis, plays a key role in the global energy and technological transition, although the impact of this silent crisis has already become irreversible. Currently, large funds and investment banks have issued warnings about the upcoming situation.
Benjamin Loubet, head of commodities at French Odey Asset Management, emphasized, "Copper is the core of the electricity market; everything needs it," because without this material, power generation is impossible; similarly, in the technology field, as data centers become increasingly popular. For example, a wind turbine can require up to 5 tons of copper, and electric vehicles require four times more copper than fuel-powered cars.
Loubet also said, "To achieve the energy transition, the global grid must double in scale: from the current 70 million kilometers to 140 million kilometers," "which means we should pay attention to the current supply crisis," as it could threaten certain special projects.
According to the International Energy Agency (IEA), there are currently 250 copper mines in operation worldwide, but to achieve decarbonization goals, an additional 80 mines would be needed to meet the demand for energy transition. However, experts point out that the development of new mines typically takes an average of 17 years. "We are already behind, and that's the problem," Loubet said worriedly, stating that the copper market will face a 20% supply gap by 2030, and the gap will expand to 30% by 2035.
Kerstin Höttner, director of raw materials and portfolio manager at Swiss Vontobel Asset Management, pointed out that the problem is not only due to insufficient new mine development. This expert emphasized that key copper mines in Indonesia and Chile have been closed or reduced production, and anti-mining legislation has made mining increasingly difficult, with many factors collectively exacerbating the copper supply crisis. Höttner said, "The United States and many countries in Europe are likely to begin establishing strategic copper reserves to ensure future supply." Countries stockpiling copper resources aim to secure medium- to long-term economic needs. Michael Widmer, head of metal research at Bank of America, stated, "The shortage is mainly structural."
Experts believe that the imbalance between copper supply and demand poses challenges for the global energy and technological transition, but there has been no shortage yet that affects project implementation. In addition to strong demand, mine closures or geopolitical issues in key copper-producing regions may lead to potential shortages in the future. Furthermore, major global economies use copper tariff policies in trade wars to counter each other, further intensifying market tensions.
Facing this situation, many investors believe that copper prices will surge, thereby harming demand. There is a risk that copper prices could rise too high, leading to a decline in demand, especially in areas where costs have already become a key factor, such as electric vehicles and renewable energy. Höttner noted, "Rising prices could ultimately make projects economically unviable, thus slowing the adoption and investment in these technologies." However, she believes that the suppression of demand caused by rising prices is not entirely negative, as it will balance the market. Loubet also emphasized, "Demand will inevitably be suppressed. Since supply cannot be increased, demand must be cut, and the only way to cut demand is to significantly raise prices. I think people have not fully understood the deep reasons behind copper price fluctuations."
Experts point out that rising prices may also stimulate new investments in the copper mining sector, as its profitability may increase significantly. However, development depends not only on price but also on regulation.
In addition to developing new mines, expanding existing mine capacity, and improving regulations, experts also point out that promoting copper recycling is essential to maintain supply. The French Institute of Oil and New Energies predicts that by 2050, existing copper resources will be consumed by more than 90%, so investors believe that reusing existing materials is crucial. Höttner said, "Recycled copper currently accounts for about one-third of global supply, and in the coming years, it will play a key role in balancing the market." (Translated by Liu Lifi)
Original: https://www.toutiao.com/article/7572871898183238171/
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