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Bernstein: Copper output, price need boost to achieve 2030 emissions targets

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Bernstein: Copper output, price need boost to achieve 2030 emissions targets

Copper needs to be priced 40% higher than its present US$5,972 per tonne to incentivize exploration and meet the Paris Agreement on climate change's 2030 emissions goals, Bernstein Research analysts wrote in a Sept. 30 note.

The analysts said copper production would have to grow by 3% and 6% per year between now and 2030 to meet government targets, and there would be added pressure on copper supply as a result of the emergence of electric vehicles and associated infrastructure. An additional 10 million tonnes to 70 million tonnes of copper will be needed to meet the emissions targets, according to Bernstein estimates.

"Renewable energy assets require 3 to 15 times as much copper as conventional power generation per unit of installed capacity," the analysts wrote. "Moreover, many of the major electrical components which these assets require are copper-intensive."

The Bernstein analysts said the copper industry was still reliant on "the discoveries and development of our great grandfathers" and noted a dramatic slowdown in the increase of the resource base over the past two decades. The report outlined the largest 20 copper mine discoveries, noting the 1981 discovery of Escondida in Chile as the largest and the 1991 discovery of the Ministro Hales mine, also in Chile, as the last of the top 20.

A slight strengthening of the copper price in 2018, however, saw two greenfield projects approved by Anglo American PLC and Teck Resources Ltd., which will push out the year of peak supply to 2022, Bernstein analysts wrote in March.

Wood Mackenzie recently wrote that higher copper prices were encouraging manufacturers of wind turbines, which are very copper-intensive, to consider introducing alternative materials like aluminum, but disadvantages of this metal include it requiring more maintenance.

"Further developments in aluminum technology could lead to increased substitution of copper in cabling above our current expectations," Wood Mackenzie Research Analyst Henry Salisbury said. "Additionally, future introduction of higher output turbines may reduce the number of turbines per wind farm. Considering that cabling constitutes 58% of copper intensity, this scenario could reduce copper intensity and, therefore, consumption in the future."