Industrial Info Resources Says More CAPEX Going to Coal vs. Copper

Industrial Info Resources recently released new data showing that more than 4,700 metals and minerals capital projects are currently being constructed across the globe. These projects, which include mining, processing and refining, have an aggregate investment value of $443 billion.

Industrial Info Resources provides industrial global market intelligence. Its data also showed that some 10,580 projects, with a combined value of $1.1 trillion, were under active planning and engineering. The firm’s VP of research, Joe Govreau, stated that these figures represented an 8% increase from the prior period, attributing the increase to the restarting of projects that had been delayed by the pandemic.

Govreau revealed that expenditures would continue to increase for the next several years as companies focused on increasing their production in an effort to meet expected growth in demand from the transition to clean energy.

However, the decarbonization journey isn’t off to a great start, especially if one compares investments in fossil fuels such as coal with investments in copper. Despite being the biggest culprit in carbon emissions, investments in coal mining are significantly higher than those being made in copper mining. This is mainly because the metal intensity of copper in renewable energy sources, including wind and solar, is nowhere near that of gas or coal.

Metal intensity refers to the quantity required for every megawatt of energy produced. In this case, more than eight tons of copper will have to be installed in order to generate one megawatt (MW) of offshore wind energy. This is a large quantity, especially if one considers that only about 880 kg. of coal will be required to produce the same amount of energy. It doesn’t help that the production and consumption of coal increased this last year as a result of steelmaking and rising demand for power generation.

One study found that for the world to reach net-zero emissions in the next three decades, 19 million tons of additional copper needed to be produced. Industrial Info Resources tracks active copper projects expected to begin construction in 2022 to 2023. These projects, which number 708, have a combined value of about $68 billion.

It comes as no surprise that Chile has 123 ongoing copper projects because it is the largest producer of copper globally. The country’s projects have a collective value of roughly $18.2 billion. China follows close behind, with new projects that have an aggregate value of $13 billion. Russia is next, boasting 24 new projects involving the red metal. It plans to spend over $12 billion on those projects.

The volume of capex going into coal mining goes to show how current coal extractors, such as Warrior Met Coal Inc. (NYSE: HCC), are having a good run on the global energy market as a result of the surge in the demand and price of coal internationally.

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