Copper, Not REE Shortages Could Be a Bigger Threat to the US

Rare-earth elements (REEs) have dominated the news lately after the explosive meeting between President Trump and Ukraine’s president Zelenskyy resulted in a minerals deal falling through between the two countries. However, America needs to be more concerned about expected supply shortages of copper.

While copper mining has been going on for centuries, its demand has been surging. Consequently, the price of this metal has seen a nearly 75% uptick since 2020. The increased demand is partly due to efforts to switch to greener forms of energy as well as the electrification of vehicular transport.

The current leading copper producers, such as the DR Congo, Peru, and Chile are racing to meet this growing demand but they are also coming under increasing pressure to address environmental concerns in their mining regions.

BHP, one of the leading mining firms in the world, warns that in 2035, the amount of copper produced will be approximately 15% less than the amount of the metal produced in 2024. This could worsen the supply-side constraints. Furthermore, the mining company says ore grades have degenerated by approximately 40% from the ore grade extracted back in 1991.

The added twist to poorer grade ore is that it is more expensive to extract this ore since it is further down inside the earth, and that lower-quality ore is significantly more expensive to process into forms that can be used in different industries, such as in the making of the copper wires used in electric grids.

Additionally, America imports 50% of the copper it needs from nations like Mexico and Canada. As you may know, the Trump administration has been big on tariffs and copper will also be subjected to the 25% tariff on imports from Canada.

Fixing the copper supply deficit is a significant challenge. For example, a Chinese firm has taken 16 years to finally break ground at a proposed copper mining site in Afghanistan after a protracted permitting process and delays. In America, social and environmental concerns, as well as delays in permitting mean that it can often be decades before a new mining project can start production.

As the years drag by during the permitting process, the industries utilizing copper are ramping up their production. For example, an internal combustion engine vehicle requires just 25% of the copper needed in EV manufacturing. More EVs are being made, which is straining existing copper supplies. EVs also require charging infrastructure, which calls for more copper in upgrading grids.

Urgent attention therefore needs to be directed towards finding all that extra copper that will be needed over the coming years and decades. Companies like Platinum Group Metals Ltd. (NYSE American: PLG) (TSX: PTM) are working as best they can to develop new copper mines to address the surge in the demand for this metal around the world.

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