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Copper Report

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MCN Editor Dan Markham CDA chief disappointed with copper’s exclusion from Critical Mineral List, hopes for review before 2025.

The coming years will be the age of electrification. If something can be made smarter, whether that’s a car, an appliance or a device we haven’t even considered yet, it will be. 

This is not just a trend, but an inevitability. And it will mean an increase in demand for a great many products, most notably copper. 

Making those products here is less of an inevitability. But as the last two years of global illness preceding global conflict have demonstrated, the ability to source and produce domestically is vital to the nation’s health. 
 
The United States government is attempting to address the supply chain problems that have dominated headlines for the past year, targeting those commodities that are currently scarce. In February, the United States Geological Survey released a list of 50 commodities essential to the U.S. economy and national security. Much to the dismay of the copper industry, the red metal was not listed among those critical minerals, a compendium which included fellow industrial metals aluminum, beryllium, chromium, nickel, tin and titanium.

“Copper being the first material off the USGS list when it’s actually used in all of these applications doesn’t make sense,” says Andy Kireta Jr., president and CEO of the Copper Development Association. 

According to Kireta, copper was excluded because the metal’s import penetration levels did not meet the threshold established by the USGS. 

The CDA believes inclusion in the list of critical minerals is crucial for copper to meet the demand onslaught expected in the coming years. That demand spike is being driven by the push for electrification. 

The U.S. is targeting a goal of 50 percent of the vehicles sold by 2030 to be electric, a massive jump from where the market stands now. However, the recent climb above 5 percent EV sales is typically a harbinger for more rapid acceleration of electric vehicle adoption, Kireta said. 

With EVs, electrical grid upgrades and other electrification projects, the demand for copper products is expected to surge. Current projections call for demand growth between 35 and 50 percent between now and 2050, a figure Kireta believes is realistic. 

Some changes in the copper scrap industry will help in the immediate future. Currently, 550,000 metric tons of copper-bearing scrap is exported. However, there are five major projects in development that would take copper scrap of varying levels and capture and keep the raw materials within the borders of the United States. “That will go a long way in the short term to address the potential demand-supply gap we see coming,” Kireta says. 

But the longer term outlook is where the industry is looking for help from policy makers. The U.S. has the natural resources to supply its domestic appetite. There are ample stockpiles of copper concentrate around the U.S. that could be tapped, enough to supply our needs and to serve a robust export market. There are dozens of proposed projects awaiting approval, though that remains a lengthy process. Reducing some of the time from design to completion would be helpful. 

Moreover, Kireta notes, simply getting the material out of the ground isn’t quite enough. The U.S. must still send that copper concentrate overseas to a smelter, as it’s been decades since smelting in the U.S. has been cost effective. Such a glitch in the supply chain is one thing the inclusion of red metals on the Critical Mineral List would address. 

If the U.S. determines copper is critical to our future needs, the designation will help incentivize and streamline the approval of all related projects, from mining sites to the potential for development of new smelting capacity here in the U.S. There could even be incentives for the development of such projects. 

As it stands, the incredible delay between project announcement and the project coming online, currently at least 10 years, serves as a roadblock to many copper projects, particularly given the notoriously fickle nature of red metals pricing. 

Given copper’s exclusion from the original list, the industry could have to wait three years before the 2025 review. However, Kireta hopes the USGS will consider an interim review. 

The longer copper is kept off the list, “the longer projects languish on the drawing board,” he says.

Ultimately, the failure for the domestic industry to keep up with the growing demand will have serious effects on the entire supply chain. Kireta notes many large manufacturers who are heavy consumers of copper products are already speaking to producers about securing material directly from the producers, potentially cutting the distribution middleman out of the equation. “If I were a service center, that would be concerning,” he says. 

Caption:
Copper demand is expected to grow up to 50 percent in the next 30 years. 
(Metal Center News file photo.)