No plan will make a dent in China's dominance in copper processing

While the growth of electric vehicles and large-scale battery storage has led to numerous reports of tight global cobalt and lithium supplies, an International Energy Agency report on mineral supply chains highlighted the solar industry's reliance on copper.

According to the IEA's 'Role of Key Minerals in the Clean Energy Transition', Peru's copper mining plans will be diversified and Congo and Mongolia can do little to reduce China's dominant role in copper processing.

Studies have shown that solar power requires twice as much copper as coal-fired power, largely because of the power transmission properties the metal exhibits, especially in underground and undersea power lines, where it is preferred over aluminum, which is widely deployed in overhead lines.

The IEA report notes that huge growth in solar power is expected to drive a surge in demand for new grid infrastructure by 2040. The copper content of power lines - combined with the fact that the metal makes up about 1 per cent of the content of standard silicon solar panels and about 40 per cent of rooftop PV systems, combined with its use in cluster inverters - means that the 350 kilotonnes of copper used globally last year is likely to reach 990 kilotonnes by 2040. That estimate, based on the IEA's sustainability scenario, would be 800 kilotons, if conservative as usual, thanks to solar power.

The report also looked at three solar alternatives, including wider adoption of cadmium telluride, thin-film photovoltaics, perovskite-silicon tandem technology, and gallium arsenide panels. The return of thin-film panels will push demand for tellurium to 1.4 tonnes by 2040, up from the current global demand of 500 tonnes. It will also support a cadmium market of 1.3 tonnes, taking a share of the current annual supply of 2.3 tonnes.

If ultra-efficient gallium arsenide solar technology is more widely adopted, 3.5 kilotons of gallium will be needed by 2040, more than ten times the current annual market for sufficiently high grade gallium arsenide, and about a quarter of current arsenic production - 8,000 kilotons. If the commercialization of perovskite-silicon tandem devices were accelerated to capture a share of the global solar market, it might not have such a dramatic impact on the supply of key materials, but it would raise demand for lead, the IEA said.

In terms of current mainstream solar technology and its grid expansion needs, about 30 per cent of copper is currently mined in Chile, with Peru, China and the Democratic Republic of Congo the other biggest suppliers, the IEA said. About 30 per cent of global supply is divided between five entities: Chile's state-owned Codelco, Anglo-Australian miner BHP and Anglo-Swiss rival Glencore, Arizona-based Freeport McMoRan and Mexico's state-owned Southern Copper Corp. Codelco has the largest global market share of about 8 percent, the IEA said.

diversification

Since 2010, investment in copper production has been steadily growing, although new crown related investment reduced from $18 billion in 2019 to $12 billion last year, and also plans to add new deposits in Congo, Indonesia and the United States, to diversify production, while the average import of copper from discovery to production time is about 17 years, So more investment in production is needed to meet expected demand.

The ubiquity of copper mining and the associated price stability and maturity of trading markets are also offset by the fact that the quality of copper ore in the world's most mature deposits is rapidly declining as the most readily available resources are depleted.

Even if production were expanded enough to meet demand, the IEA said, none of the current plans would reduce the world's reliance on China to refine iron ore into processing materials.

In its 287-page study, the IEA makes six recommendations on how to ensure that enough transition minerals remain available to meet global carbon-reduction targets.

Policy support will be critical to drive new supply, and technological innovations will help replace minerals with more mundane materials, such as cobalt and lithium for electric vehicle transitions and energy storage, and nickel, zirconium and platinum group metals for hydrogen electrolyzers and fuel cells. The IEA added that technological breakthroughs could also extract important minerals from other sources, such as e-waste and mining by-products.

The report also shows that wider and better recycling will be critical to shoring up supply, and that countries can take action to make their supply chains more resilient.