(COPPER AND THE GREEN ENERGY REVOLUTION)
June 14, 2023
Hello everyone,
Today I thought I would venture into the world of copper, look at a bit of history, and understand why it is so valuable today, what we use it for and why there may be an impending shortage in the future.
Copper has played a big role in the world economy for thousands of years.
In the Bronze Age, blacksmiths worked out how to forge copper and tin. The continual refinement of copper, both in its combination with other metals and the extraction process, transformed the world by improving tools, construction, and weaponry.
The Middle Ages and the Age of Discovery saw copper applied in new and exciting ways. Copper became a part of artistic expressions in Renaissance canvases and sculptures and later in styles such as daguerreotype photography. (For those who don’t know, daguerreotype was the first commercially successful photographic process (1839 – 1860) in the history of photography. The daguerreotype is a direct-positive process, creating a highly detailed image on a sheet of copper plated with a thin coat of silver without the use of a negative.) Copper has also played a large role in international relations and affairs. It lined the hulls of Christopher Columbus’s seafaring fleet to prevent the ships from sustaining damage from salt water and biological agents. Furthermore, the Statue of Liberty, France’s gift to the fledging United States, incorporates more than 200,000 pounds of copper (but her green tint comes from years of oxidation).
One of the most significant moments in copper history occurred in 1977, when technology giant IBM adopted oxidized copper interconnects, replacing the aluminum standard. The result was fast, smaller, and thinner computers and gadgetry due to copper’s malleability and ability to conduct electricity with 40% less resistance than aluminum.
So, we find that copper is used in electrical and heating equipment because its chemical properties make it such a useful conductor. Today it is used in car motors, household pipes, washing machines, all sorts of things we use every day. Furthermore, we can’t forget to mention all the different copper alloys that are mixed into other metals and items. Significantly, the metal is so easily recyclable that most of the copper on earth remains in the ground. In fact, only 12% of all copper on Earth has been mined throughout history and nearly all of it remains in circulation.
Some of the copper in circulation right now could once have been jewelry or armor in ancient Egypt. In fact, the International Copper Association estimates that an incredible 75% of the copper produced since 1900 is still in use.
In May 2021, analysts at Goldman Sachs called copper “the new oil.”
So, why are some people, including commodity analysts at Goldman Sachs warning about a copper shortage with dire consequences for the economy?
In short, it is about the mining and recycling infrastructure being unable to meet the potential demand from these industries.
In May 2021, leading on from “the new oil” comment, analysts at Goldman Sachs suggested that copper could rise in value in the next few years from $9,000/ton to $20,000/ton.
With this in mind, we need to position now for long-term demand in green technology. I’m not saying this rise is going to happen next year, but it will in the next 5-7 years.
People are just starting to realize the magnitude of copper’s presence throughout the economy.
Mind you, we call it Dr. Copper because we see it as having a Ph.D. in economics. When economic activity increases demand for copper increases and copper prices rise. In that sense, the copper market becomes a barometer for global economic growth – a leading indicator.
But Dr. Copper does not always provide a certain diagnosis. Sometimes, the connection between copper prices and economic growth breaks down.
Copper is important for a lot of local economies as well. You may be wondering where it comes from.
In the last 50 years, South America has become important. Peru and Chile really dominate. Arizona is the leading copper producer in the U.S. Zambia in Africa has a significant copper belt. There is also a large mine in Mongolia.
The copper industry is bracing for a boom in demand. Governments and companies around the world are preparing for a green energy revolution. We will witness entire new power grids using solar, wind and water to power turbines and feed electricity into copper wires. What’s more, EVs need much more copper than their gas-powered counterparts. Take a look at the graph here and compare the quantity of copper used in each vehicle.
There is basically three and a half times more copper in EVs than in gas-powered cars. You need to account for the motors in the batteries – more electronics.
Solar has a similar story. With conventional energy, we normally would use one metric ton of copper per megawatt of generating capacity. When you look at renewable energies, you are looking at four to six times that amount of copper.
Solar installation could be something like 9,000 lbs/megawatt.
Wind farms could be as much as 15 million lbs. of copper.
In individual wind turbines, there would be about 800 lbs. of copper.
So, as we move to a decarbonized economy, we are basically replacing C in the periodic table with CU.
Higher copper prices may have a silver lining. It will cause mining companies to break ground on more new projects since extracting copper will have a bigger payoff. There’s also new technology springing up to extract copper. For more information there, investigate Jetti Resources. This company is now able to extract copper from low-grade material – that is, material that was once dumped in the rubbish.
It's interesting to note that 65% of all unearthed copper is used by the electronics industry.
The global copper market reached USD 241780 million in 2021-2022. This market is expected to reach the value of USD 343900 million by the end of 2030.
Start positioning for the future growth of this market.
The life cycle of copper is infinite
Environmental benefits of secondary copper from primary copper
Wishing you all a great week.
Cheers,
Jacquie
Mad Hedge Jacquie’s Post
