Dr. Nicole Adshead-Bel, a director at Cupel Advisory, stated last week that as Europe and the United States move toward using more electricity in energy and transportation, the demand for copper would increase as a result of the current supply crunches. Copper is usually used in renewable energy systems to generate power from hydro, solar, wind and thermal energy.
Adshead-Bell added that copper was an important industrial metal, noting that there was a shortage in supply as well as few new sources. Projections show that by 2040, the demand for copper will have risen by 50%, mainly driven by transportation needs. She elaborated that copper was heavily used in car batteries, noting that the increase in the use of the metal in ICE vehicles to its use in electric vehicles went from 100 pounds to 400 pounds.
The Cupel Advisory director also argued that the move to reduce the consumption of fossil fuels was too fast, especially with the increasing adoption of electrification. Adshead-Bell explained that the environmental movement and ESG standards only increased the cost of living, pointing to the example of the state of California, which had directed EV owners to not charge their cars because the state has been plagued with energy issues.
Adshead-Bell noted that the policies enacted as a result of the environmental lobby had caused a lack of supply and security in key commodities, which had driven up the cost of raw materials. She explained that the average individual had no idea where the raw materials came from, given their minimal knowledge on mining.
It is expected that industrial metals such as nickel and silver will also experience shortages in the coming years. Adshead-Bell observed that this was because the supply for these metals could not keep up with the demand, noting that it took years to begin production at a mine. She revealed that the average time required between mine discovery to production was longer than 15 years and it was taking even longer because it’s increasingly harder to acquire permits and build mines in the industry.
The director also praised nations such as Brazil, which has implemented strategic policies that have streamlined the acquisition of mine permits; she claimed that nations under the Organization for Economic Cooperation and Development such as the United Kingdom hadn’t been successful in rectifying this serious supply issue. Adshead-Bell added that security of energy supply mattered, especially for individuals who would face energy shortages all around Europe in the coming winter.
The supply of copper from extraction companies such as Southern Copper Corporation (NYSE: SCCO) is likely to be woefully inadequate in the coming years as the move to greener forms of energy intensifies around the world and competition for so-called energy metals skyrockets.
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