The demand for copper globally is projected to skyrocket by 75 percent to 56 million tonnes by 2050, according to a forecast by Wood Mackenzie. However, there is a slow diversification away from Chinese copper, which is a critical mineral needed for green energy. This lack of diversification could potentially be costly, as research shows that a scenario without China for the copper supply chain would require a significant increase in processing capacity to meet energy transition targets.
Nick Pickens, research director of global mining at Wood Mackenzie, highlights the importance of considering the entire supply chain, not just mining operations, as governments and manufacturers aim to diversify away from China. Wood Mackenzie estimates that there will be an additional 8.6 million tonnes of copper demand outside China over the next decade. This demand represents 70 percent of smelter capability and 55 percent of fabricator capacity in the rest of the world.
However, the research also points out that China already accounts for a significant portion of global smelter capacity expansion, with 97 percent of global smelting and refining capacity under its control. China contributes over 3 million tonnes of copper production and approximately $25 billion in investment. Despite commitments from national governments to increase critical minerals production capacity and reduce dependence on China, progress has been slow.
Wood Mackenzie predicts that an additional $85 billion of investment would be needed to find new smelting and refining capability to displace Chinese facilities. Outside of China, the consultancy firm identifies one custom smelter in India, two integrated smelters in Indonesia, and a new smelter in the Democratic Republic of the Congo as sources of an additional 16 million tonnes of capacity. However, some of these smelters have yet to be commissioned, and financing these investments could face resistance on environmental and social grounds, particularly in Europe.
In terms of the United States, the country has focused on secondary smelters and scrap copper, with plans to establish a new complex in Georgia. However, the US has yet to invest in primary alternatives. Wood Mackenzie emphasizes the need for pragmatism and compromise to achieve net-zero goals without imposing excessive costs on taxpayers. Easing global trade restrictions could be one necessary concession.
Australia, on the other hand, is experiencing a positive outlook for copper export earnings. The country’s Department of Industry, Science, and Resources has revised up its export earnings for copper in 2024-25 and 2025-26, attributing it to an upward revision of forecast prices and higher export volumes of metal content including copper ores, concentrates, and refined copper.
Recognizing the importance of copper in the global transition to net-zero, the Minerals Security Partnership Principals’ meeting concluded with countries expressing their intent to strengthen their partnership on accelerating the development of diverse and sustainable critical minerals supply chains. These countries include the United States, Australia, Canada, Estonia, Finland, France, Germany, India, Italy, Japan, the Republic of Korea, Norway, Sweden, the U.K., and the European Union.
In conclusion, the demand for copper is expected to surge in the coming decades, driven by the global transition to net-zero. However, the slow diversification away from Chinese copper poses challenges and could require significant investments in processing capacity. Governments and manufacturers need to consider the entire supply chain when aiming to reduce dependence on China. Pragmatism and compromise will be essential in achieving net-zero goals without imposing excessive costs on taxpayers.
