Numerous experts have already pointed out that copper is one of the most important components of the energy transition, and therefore copper demand and price are likely to rise significantly in the coming years. Now the Department of Industry, Science, Energy and Resources (DISER) of the Australian government is also speaking up and is equally convinced that the transition of the global energy sector to low-emission technologies will have positive effects on copper consumption in the coming years.
According to DISER, by 2030, around 10% of global copper demand will come from the use of electric vehicles, batteries, and charging infrastructure. The conductivity, malleability, and durability of the red metal would give it crucial importance for electric cars, charging infrastructure, batteries, and green energy production.
According to the report from Australia, global copper demand is expected to increase by an average of 2.7% per year in the coming years, reaching a volume of 30 million tons as early as 2028. At the same time, it is estimated that global mine production of copper will only grow by 2.0% per year between 2023 and 2028. This should reach a volume of 24 million tons by 2028.
According to the forecasts, mine production will continue to increase in the first half of this period – due to production growth in Chile and Peru. However, in the second half of the forecast period, a slowdown in growth is expected.
Mine operators are faced with declining ore grades, higher production costs, aging facilities, and increased environmental and social controls. The declining quality of deposits also means that most new projects in the development pipeline would not have the size and cost advantages of existing mega-projects, according to the DISER report.
Deficit Expected in the Copper Market
Given the significant growth in demand with only slow production growth, a deficit in the copper market is expected to develop. According to DISER experts, copper prices should remain relatively stable until the middle of the period under consideration, as an increase in supply from Chile and Peru will match the rising demand until then.
However, DISER expects copper demand to exceed supply from 2026, creating a market deficit and driving prices upward. Higher production costs – also due to declining grades – as well as rising investment and financing costs would exert additional upward pressure on prices, it was said.
For copper exploration companies, where a potential production decision is usually still several years away, we believe these are excellent prospects.
