Power Grid

12 May 2022

Massive Copper Supply Required for Electrification of Global Economy

12 May 2022  by   
More than 700 million mt of copper will need to be mined in the next 22 years to maintain 3.5% GDP growth, without taking into account the electrification of the global economy, which is the same volume of copper ever mined, Ivanhoe Mines Founder & Co-Chair Robert Friedland told the Investing in African Mining Indaba 2022 on May 11.

"Mining has a huge challenge," he said, adding that electrification was key to hitting global decarbonization targets.

A single 1,000 lb EV battery used around 500,000 lb of raw material, with Friedland saying that this meant that just transitioning the world's passenger vehicles into EVs would require the mining of more metals over the next 30 years than ever mined throughout history.

"Copper is the EV story. In 2030, 20 million EV charging points are expected globally, consuming over 250% more copper," he said.

In 2040, passenger EVs would require more than 3.7 million copper/year, Friedland said, while ICE vehicles would need around 1 million mt.

He noted that ICE vehicles contained 20 kg of copper, which moved up to 40 kg for a hybrid vehicles, 109 kg in a plug-in EV and much more expected to be contained in next generation electric trucks.

"We can't get there without electrifying the world economy. It's the electrify everything era, but the problem is that renewable technology is absurdly metals intensive," Friedland said

He pointed out that solar and wind-power technology was seven to 37 times more copper intensive than electricity.

In addition, all power grids globally were unreliable, with huge investment needed to upgrade aging grids -- in the US alone, he said investment of about $208 billion was needed by 2029 and around $338 billion by 2039.

"Electricity grids are old and cannot handle all electrification of the world. How much copper will we need to build new smart grids in Europe, US, and what about Africa?" Friedland said.

Global shortages

Global shortages of copper, nickel and other battery metals were expected due to underinvestment in the mining industry, Friedland said.

A 9 million mt copper deficit was expected by 2030, he said using a forecast from BMO Capital Markets.

The London Metal Exchange three-month copper price having closed at $9,228.50/mt May 10, falling 5.5% since the start of 2022, despite reaching an intra-year high of $10,674/mt on March 4.

Older copper mines were also seeing lower grades, which meant more water use, electricity use and global warming per unit of copper produced. Friedland said the energy needed to produce copper had increased 16 fold per unit, while consumption had doubled.

"We're sitting on a cliff -- most existing copper mines are looking like little old ladies lying in bed waiting to die," he said.

Friedland asked where all the metals for the energy transition, including copper, was going to come from, adding that the world would have to invest $240 billion over the next five years to meet growing metals demand.

"All the money went into the internet, broadband, the cloud, apps... and not enough came here for miners -- we starved mines of capital so we shouldn't be surprised when we enter a period of disruption... I can assure you the whole thing about improving life on this blue dot depends on the mining industry," he said.

Africa part of answer

Africa was part of the answer, as it contains many reserves, with the Arabian Shield also being where responsible and future metals and minerals would be mined, Friedland said.

However, he said any new projects needed to uplift the African people.

"We need to revolutionize mining to make it part of the solution not the problem," Friedland said

Ivanhoe is expanding its Kamoa-Kakula copper mining complex in the Democratic Republic of Congo, which will increase copper production capacity to around 600,000 mt/year by the fourth quarter of 2024 to make it the third-largest copper mining complex in the world and the largest Africa.

First production from the Phase 3 expansion is expected to start by the end of 2024.

Friedland said 10-20 more large copper mines would be needed to maintain a 3.7% economic growth, with even more required for electrification.

"We need eight more Kamoa-Kakulas in the next few days, it's a big problem," he said, adding that the world needed to change how we produce, distribute and transmit metals and how the whole supply chain is driven.

Africa could also contribute to the hydrogen economy, with South Africa holding some of the largest palladium and platinum assets in the world, Friedland said, with most of the world due to look to South Africa as supply from Russia was no longer an option.

"Hydrogen powered cars need five times more platinum than gas-powered cars... we need to develop a lot more mines," he said.

Ivanhoe is developing the 64%-owned Platreef PGM mine in South Africa, which was advancing towards first production and is due to produce 590,000 oz/year of palladium, platinum, rhodium, gold and more than 40 million lb/year of nickel and copper in phase 2 expansion.


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