Copper demand to grow by 1M metric tons per year as supply faces complex challenges

Global copper demand is expected to increase at an annual growth rate of 1 million metric tons per year until 2035, double the volume seen in the last 15 years, a new report from BHP has highlighted.

This equates to a compound annual growth rate (CAGR) of 2.6%, an acceleration from the 1.9% seen since 2006, the report said.

Surging demand is being driven by the simultaneous adoption of copper-intensive technologies, such as electric vehicles (EVs), renewable energy systems, and data centers, alongside continued economic development in emerging markets.

EVs alone use around three times more copper than traditional internal combustion vehicles, and copper demand from EVs is expected to lift the transport sector’s share of total copper demand from 11% in 2021 to over 20% by 2040, BHP said. Copper use in data centers is projected to increase six-fold by 2050.

Meanwhile, traditional copper demand remains strong as growing economies like China and India continue to urbanize and expand electricity consumption.

“Through the 21st century, we expect copper to remain an essential building block to modern life as the world seeks to improve living standards for billions of people, transitions towards a net zero greenhouse gas emissions economy, and further digitalizes its industries and societies,” BHP said in the report.

Supply challenges

Meeting the expected demand for copper will be a complex challenge, as both primary supply from mines and secondary supply from recycling will need to scale up, BHP highlighted in its report.

Currently operating copper mines are expected to meet more than half of the future copper demand over the next decade, but they face significant hurdles, including aging infrastructure, declining ore grades, and rising costs. It is estimated that existing mines will be producing about 15% less copper by 2035 than they do today, due to these challenges.

Declining copper grades, as higher-grade ores are depleted first, mean that more material must be mined, processed, and transported to produce the same volume of copper, which increases costs. Without technological advancements, grade decline is likely to further push up production costs.

Many existing mines will need capital investment to modernize or extend their operations, and new technologies like AI-enabled processing insights and advanced leaching techniques may offer improvements, but widespread adoption will likely not occur before the mid-2030s.

BHP noted in its report that recycled copper is expected to play an increasing role in meeting global demand. However, the availability of copper scrap, especially "old scrap" from end-of-life products, is limited by product lifecycles, which can range from months to decades.

“We estimate that in 2021 only 43% of available ‘old scrap’ was collected and recovered for re-use, falling to 40% in 2023 as lower prices, slowing economic activity and regulatory changes acted as headwinds,” the report said.

Nevertheless, recovery rates are expected to rise, and by 2050, scrap copper could account for around 50% of total copper consumption, up from one-third today.

Greenfield and brownfield projects

To meet the growing demand, new copper supply will need to come from both brownfield and greenfield projects concentrated in Latin America, Australia and Africa, the report noted.

Brownfield projects, which involve expanding or extending existing mines, are expected to contribute up to 30% of the total copper supply by 2035. These projects benefit from existing infrastructure and workforce, making them less risky compared to greenfield developments.

However, brownfield projects are not immune to rising costs and regulatory challenges, with capital intensity for these projects having increased by about 65% since 2010.

Greenfield projects, while offering the potential to unlock large, high-grade copper deposits, face even greater challenges.

Environmental, social, and jurisdictional concerns can lead to long lead times and delays, and many greenfield projects have faced significant setbacks. BHP said its review of 30 major undeveloped greenfield projects revealed that most had been delayed, with start dates consistently pushed out since 2014.

These projects are expected to contribute around 5 million metric tons per year of copper by 2035, or 14% of total supply, but delays are common, particularly for larger projects that involve capital costs exceeding $5 billion.

African greenfield projects, particularly those backed by Chinese investment, have been an exception to the global trend, delivering a 90% increase in copper production over the past decade at competitive capital intensities.

BHP concluded that, despite technological advancements and increased copper recycling, it will be difficult for supply to meet the strong demand signals, potentially leading to further copper price increases and supply shortages. 

News from the field

• Foran Mining Corporation (TSX-V:FOM, OTCQX:FMCXF) reported promising assay results from its summer drill program at the Tesla Zone at the McIlvenna Bay property in Saskatchewan, including intercepts of 31.2m at 2.7% copper equivalent and 3.4m at 6.6% copper equivalent. These results reinforce the robust mineralization at Tesla, with assays from six additional holes still pending.
• Northstar Gold Corp. (CSE:NSG) announced a Memorandum of Understanding (MOU) with Novamera to explore and mine the high-grade Zone 2 of the Cam Copper Mine using Novamera’s Surgical Mining technology. Novamera will secure financing to conduct a four-stage program aimed at extracting copper from the copper-rich Zone 2 of the Miller copper-gold property in Ontario.
• QC Copper and Gold Inc. (TSX-V:QCCU, OTCQB:QCCUF) announced that it plans to acquire 100% of Cuprum, owner of the Theirry copper project in Pickle Lake, Ontario, in an all-share deal. With this acquisition, QC Copper highlighted it would own two major copper deposits in Canada, Thierry and Opemiska, located in Quebec.
• Ivanhoe Mines Ltd. (TSX:IVN, OTCQX:IVPAF) produced  a record 40,347 tons of copper in concentrate during August at its Kamoa-Kakula complex in the Democratic Republic of Congo. The company is ramping up to steady-state production, on track to achieve its 2024 guidance of between 440,000 and 490,000 of copper.
• Happy Creek Minerals Ltd. (TSX-V:HPY, OTC:HPYCF) has entered into an asset purchase agreement to sell the Highland Valley copper project in British Columbia to Metal Energy. The acquisition terms include a $300,000 cash payment to Happy Creek and the issuance of Metal Energy shares equivalent to 9.9% of its total equity. Happy Creek will also receive up to $6 million in additional equity over the next four years, as well as a 2.5% net smelter royalty (NSR) on the project.
• Falcon Gold Corp (TSX-V:FG, OTC:FGLDF) announced that it has commenced drilling at its Great Burnt copper project in Newfoundland. Drilling will initially test 10 geophysical anomalies with plans to extend the program once the necessary government approvals have been received.
• Electric Royalties Ltd (TSX-V:ELEC, OTC:ELECF) announced it has entered into an agreement with Minera Cobre Verde to acquire a cash-flowing copper stream on the Minera Cobre Verde Mine in Chile for US$2.1 million. The deal gives Electric Royalties the right to purchase 76,000 pounds of copper monthly at a fixed price of US$2.75 per pound for four years, with the potential to double the stream for an additional US$2.1 million.