copper shortage expected to hit 4 million tons by 2030
- JPMorgan analyst Patrick Jones highlights a significant long-term supply deficit in the global copper market, predicting a shortfall of approximately 4 million tons by 2030.
- The demand for copper is surging due to its essential role in electric vehicles and renewable energy, with EVs containing 2-4 times more copper than traditional vehicles.
- Despite potential substitution with cheaper materials, it is unlikely to close the long-term supply gap, leading to expectations of higher copper prices and benefiting mining and electrification sectors.
The global copper market is facing a significant long-term supply deficit, with projections indicating a shortfall of around 4 million tons by 2030. This deficit is largely attributed to the surging demand for copper, which is essential for electric vehicles (EVs) and renewable energy infrastructure. EVs, in particular, utilize 2-4 times more copper than traditional internal combustion engine vehicles, highlighting the metal's critical role in the energy transition. While there have been discussions about substituting copper with cheaper materials, JPMorgan analyst Patrick Jones argues that such measures will not be sufficient to fill the impending supply gap. Improvements in battery technology may reduce copper intensity in EVs, but increasing vehicle sizes and battery densities are likely to counteract these gains. China, which accounts for over half of global copper demand, presents additional challenges for substitution efforts. Although some sectors may see increased use of aluminum, significant barriers remain, particularly in power generation and solar power applications. As the supply-demand gap widens, investors are advised to prepare for rising copper prices. Mining companies and electrification plays are expected to benefit from this trend, with key players identified in various regions, including Teck Resources in North America and Lundin Mining in Europe.