The Copper Conundrum

Guest Post by Willis Eschenbach

There’s been a lot of talk lately about how the scarcity of “rare-earth” minerals like lithium and cobalt will short-circuit the “green revolution”. In that regard, I came across an interesting 2022 Standard & Poors Global (SP Global) study on the amount of plain old everyday copper needed for a Net-Zero 2050 scenario. The study is entitled “The Future of Copper: Will the looming supply gap short-circuit the energy transition?“, and the answer is … yep. It will.

In my post “Bright Green Impossibilities” I listed a number of physical, political, and economic reasons why we can’t get to “Net-Zero” CO₂ emissions by 2050. This post is about one reason that I didn’t mention in that post.

The problem is that copper is the material most suitable in most conditions for conducting electricity … and in addition, it’s used in building construction, appliances, electrical equipment, brass hardware, and cell phones, as well as expanding applications in communications, data processing, and storage.

[UPDATE: As several commenters have mentioned, aluminum is replacing copper for the transmission of electricity at high voltages (generally over 480V.) However, copper is still used for to-the-home and in-home wiring, as well as all the other uses listed above. And the numbers in the linked study and in the graphic below are unchanged.]

So if we’re going to go to an all-electric world, we’re going to need a truly massive amount of copper.

How much? Well, according to “The Future of Copper” linked above, here’s the bad news:

Figure 1. Estimates of the amount of copper needed to achieve Net-Zero 2050.

No bueno.

And as they say on the TV, “But wait, there’s more!” The USGS estimates that there are 880 million tonnes of recoverable copper in the ground. And here’s how that compares to the cumulative copper needs shown in Figure 1.

Figure 2. Cumulative amount of copper required for Net-Zero 2050 per Figure 1, and known recoverable copper reserves using current technology.

So … by 2040 we’ll need about all the proven reserves of copper we’ve currently located in the ground, and we’re still nowhere near Net-Zero 2050. We’re likely to find more in the ground, which will allow for further recoverable reserves. But it will generally be very poor ore and expensive to mine. “Back in the day”, as they say, ores which were 4% or even 6% copper were not uncommon. But newly discovered ores are on the order of 0.1% copper. Of course, as it becomes more scarce it will become more expensive, allowing poorer ores to be economically viable … but that leads to another problem.

The current London Metal Exchange price for copper is about ten thousand dollars per tonne. So the copper necessary for Net-Zero will cost a minimum of fourteen trillion dollars at current prices. However, as noted immediately above, as copper becomes more scarce the prices will inevitably rise. So the likely total cost will be at least fifty percent higher or even more, call it a minimum of twenty trillion dollars …

And that’s just for the smelted copper. It doesn’t include turning the copper into electrical wiring with insulation, transporting the wire and other copper products to where they’re going to be used, installing the new transmission lines, substations, switching gear, generators, and all the other costs to get the global electrical grid up to what would be required for an all-electrical world. Top consulting firm McKinsey says:

Our analysis of the industry-standard scenario for net zero by 2050 suggests that about $275 trillion in cumulative spending on physical assets, or approximately $9.2 trillion per year, would be needed between 2021 and 2050.

That means we’d have to spend $25 billion each and every day, including weekends, until 2050. Starting tomorrow. Riiight … full McKinsey article here.

And expanding any kind of mining faces a host of political, environmental, and regulatory problems. It can easily take ten years and billions of dollars before the first shovel goes into the ground. Opposition from “greens” has stopped almost all new mining in the US … while at the same time, those geniuses clamor for an end to fossil fuels.

A final difficulty factor. Much of the copper ore, and the majority of the refining and smelting facilities, are in … yep … China. From the linked study:

The challenge will be compounded by increasingly complex global geopolitical, trade, and country-level risk environments. There are several dynamics that will have a particular bearing on copper access. China holds a preeminent position in copper smelting (47%), refining (42%), and usage (54%), in addition to its sizable position in production, making it the epicenter of world copper. Continued trade tensions and other forms of competition between the United States and China could affect the copper market going forward. Supply chain resilience has emerged as a strategic imperative, particularly after the COVID-19 pandemic and the war in Ukraine. The study finds that by 2035 the United States will be importing between 57% and 67%—that is up to two-thirds—of its copper needs. An intensifying competition for critical metals is very likely to have geopolitical implications.

And if you think the Chines won’t play those “geopolitical implications” to their advantage, you don’t understand our Eastern friends.

So can we please stop this Net-Zero nonsense? It’s an impossible goal that will not solve an imaginary problem, and it will bankrupt us all, cause widespread energy poverty, and shaft the poor in the process.

Best to everyone on a lovely winter day,

w.

As Is My Wont: I can defend my words. I can’t defend others’ interpretations of my words. So when you comment, please quote the exact words you are discussing.