Demand For Copper is Projected to Rise
Over the next few decades, copper demand is expected to increase significantly as a result of several factors. These include:
- The global energy transition – Copper is essential for clean energy technologies such as wind turbines, solar panels, and electric vehicles (EVs).
- Technological advancements – The metal is used in computers, laptops, smartphones, data centers, and other areas of technology, so increased digitalization and connectivity is likely to increase demand.
- Growth in developing countries – Developing countries such as China and India will increasingly strive to achieve the same high standard of living as developed countries, likely leading to a greater need for copper.
- Global economic growth – As the global economy continues to grow in the decades ahead, and demand for electrical wiring and construction materials rises, demand for copper should grow too.
Copper’s Role in Renewable Energy
Copper is likely going to play a major role in the transition to clean energy. Thanks to its strong conductivity, copper can transmit electricity with minimal loss. So, it can help maximize the efficiency of renewable energy systems. It is also a durable and corrosion-resistant commodity. Therefore, it is well suited to the harsh environments that renewable energy systems are often exposed to. Additionally, copper is 100% recyclable, which means that it can be reused over and over again. This is important for creating a sustainable energy system.
How Copper is Used in the Renewable Energy Ecosystem
As countries and businesses invest more in renewable energy technologies, demand for copper is likely to rise. According to the International Energy Agency (IEA), the transition to renewable energy is projected to drive an additional 10,000 kt of global copper demand between 2023 and 2040, spurring higher demand for copper mine production to bridge the supply gap.
Copper’s Role in the Electric Vehicle Boom
How Copper is Used in EVs
Copper’s Role in the Tech Revolution
Who are the Biggest Consumers of Copper?
How is Copper Produced?
Copper production is a multi-stage process that involves extracting copper from ore and refining it into a pure metal. Here’s a breakdown of the main steps:
Potential Advantages of Investing in Copper Miners
Investing in copper miners offers several potential advantages over investing directly in copper. These include:
- Operational Leverage – Copper miners can increase their profitability by expanding production and/or improving operational efficiency. For investors, this can potentially lead to returns that exceed the simple price appreciation of copper.
- Company Growth – Miners can grow by making strategic acquisitions, developing new mines, and discovering new deposits. This growth potential is not present when investing directly in commodities.
- Exploration Upside – If a miner discovers a new large-scale copper deposit, its valuation has the potential to increase significantly.
- Dividend Payments – Many copper mining companies pay dividends, which may boost overall returns for investors.
- Ease of Investing – Investing in mining stocks is typically easier than investing directly in copper and dealing with the complexities of storing and insuring a physical commodity or trading futures contracts.
The Themes Copper Miners ETF
Footnotes:
1 Metelec, The power of copper in electric vehicles, as of February 16, 2024
2 BHP Insights: how copper will shape our future, as of September 30, 2024
