Copper is essential for a successful energy transition, and the raw material is mainly processed in China.
Copper has been used for thousands of years, but the emerging demand from the energy transition will dwarf previous developments. According to a study by the University of Michigan and Cornell University, more of the metal will have to be mined between 2018 and 2050 than in the entire history of humanity. Copper is needed not only for electrical cables, motors, and generators but also for battery storage. Unsurprisingly, the raw material is on the European Union’s list of strategic raw materials. The Critical Raw Materials Act will introduce quotas for the extraction and processing of these raw materials in the EU to reduce dependence on imports – primarily from China.
The United States Inflation Reduction Act (IRA) represents a similar approach, which the analysis firm Wood Mackenzie views critically. Without China, the energy transition would be impossible, according to a new study by the company, which specializes in data relating to the energy transition. According to data from the U.S. Geological Survey (USGS), the People’s Republic is only the fourth largest copper producer in the world and imports vast quantities of the metal itself, but its strength lies primarily in processing the ore. According to the USGS, China accounted for around half of refined metal production in 2023. According to Wood Mackenzie, China has accounted for 75% of global growth in smelting capacity since 2000.
But what would it cost to replace this capacity? The authors of the study put this at around $85 billion. Not very likely, as little has happened outside China in terms of smelting in recent years. Even if financial resources are available, resistance to such projects is expected to form due to environmental concerns.
Energy Transition More Expensive and Slower Without China’s Raw Material Capacities
The study concludes that China’s enormous investments in the downstream processing and semi-manufacturing sectors present the biggest challenge to the supply security agenda. This applies not only to copper but also to rare earths or lithium, which is processed locally into batteries for electric cars, among other things.
Given this situation, Wood Mackenzie believes the only solution is a willingness to compromise and increased pragmatism. Otherwise, the energy transition would slow down significantly and, above all, become much more expensive.
Meanwhile, copper is not the only raw material essential for climate-neutral technologies, and China dominates its processing. In addition to rare earths, there is also lithium, which is processed locally into batteries for electric cars, among other things.
You can read about the importance of copper for the economy in ancient times here.
Photo: Rohstoff.net with material from Canva