Copper and other metals crucial to energy transition technologies will likely be in short supply, mining executives warned during a March 6 panel discussion.
Copper, essential for applications such as electrical wires, is already in high demand and that demand is set to grow as the world switches away from fossil fuels. But permitting timelines complicate the development of new copper projects, slowing the industry's ability to respond to consumer needs. The mining sector would need to double its production of the red metal from 25 million tonnes per year to 50 Mt/y by 2035 to meet the goals of the Paris Agreement on climate change, Jeremy Weir, CEO and chairman of Trafigura Group Pte. Ltd., said during the panel at CERAWeek by S&P Global in Houston.
"We've got some very big headwinds, in terms of supply in the marketplace, for the energy transition," the head of the Singapore-based commodities trader said. "It's a problem."
S&P Global's "Future of Copper" report released in 2022 predicts a copper supply shortfall of 9.9 Mt by 2035 in the most pessimistic scenario. However, some believe that higher prices will push companies to innovate, recycle and otherwise find ways to extract more copper and minimize the impacts of a supply shortage.
Copper miners need to roll out new projects and expand existing ones to meet growing demand, said Richard Adkerson, chairman and CEO of diversified miner Freeport-McMoRan Inc. and another panelist at the CERAWeek event. Adkerson added that Freeport-McMoRan prioritizes investments in U.S.-based copper resources.
"Ultimately, we'll have to have brownfields projects develop," Adkerson said. "If we have greenfield projects at all, that's going to be in the context of very high copper prices."
Long permitting times will create challenges for miners trying to respond quickly to the increased demand for copper, said Bold Baatar, CEO of Rio Tinto Group's copper division. Companies need years to develop brownfield projects, and greenfield projects often take longer.
"We definitely need accelerated alignment on permitting," Baatar said during the CERAWeek event. "We've got to take into account that it takes five to 10 years to build a mine. Then, you have ten years of permitting, and suddenly you're kind of in this 15-year or 20-year development."
The U.S. recently aimed to incentivize the domestic development of copper and other mineral resources that are crucial to the energy transition with the Inflation Reduction Act. However, without permitting reform, the full benefits of the bill may be lost, Baatar said.
"The U.S. is not short of resource endowment," Baatar added. "It's short of an accelerated timeline in terms of permitting."
The U.S. could source copper from other countries as well, but other jurisdictions come with their own concerns about environmentally or socially damaging mining practices.
Jose Fernandez, undersecretary for economic growth, energy and the environment at the U.S. Department of State, said on the panel that he is more optimistic based on discussions with countries producing those minerals.
"They see this as an opportunity," said Fernandez, who is involved with an international program aiming to source critical minerals ethically. "I think I'm bullish. ... I do think, in the medium term, we've got an opportunity to really get moving."
S&P Global Commodity Insights produces content for distribution on S&P Capital IQ Pro.
