Is Copper the Unseen Hero of the Green Energy Revolution?
Copper's Ascendance: A Decisive Shift in Global Energy Dynamics
Editorial Team (ET)June 20, 2025
In a surprising turn of events, early predictions of a copper surplus in 2024 have been overturned, with end-of-year forecasts indicating a dramatic rise in copper prices. This shift is primarily attributed to the surging demand from the green energy sector. Copper, often referred to as "the metal of the future," plays a pivotal role in the construction of electric vehicles, power grids, and wind turbines. Experts now anticipate copper prices to soar to an impressive $15,000 per tonne by 2025, emphasizing the criticality of this metal in the global transition towards renewable energy sources.
The Changing Landscape
The International Copper Study Group (ICSG), in its Autumn 2023 report, initially forecasted a significant surplus of copper in 2024, as various companies worldwide geared up their operations to meet the rising global demand. However, by the year's end, updated forecasts painted a different picture, with copper prices poised for a substantial uptick in 2024. This unexpected shift is driven by ambitious climate pledges made by nations worldwide, prompting us to ponder what the future holds for copper.
Shifting Supply-Demand Dynamics
In October 2023, the ICSG projected a surplus of 467,000 metric tonnes in the copper market for 2024, a notable increase from the 297,000 metric tonne surplus anticipated in April. However, it's crucial to note that this forecast relies on the existing global project pipeline for supply and demand—a landscape that is rapidly evolving as the green transition accelerates worldwide.
The updated forecast highlights weak Western demand in contrast to robust Chinese copper output. Copper usage outside of China was predicted to contract by one percent compared to 2022 levels, primarily due to declines in refined usage in EU countries and North America. In contrast, China's copper usage was expected to grow by 4.3 percent in 2023, driven by its thriving power and electric vehicle sectors.
The Vitality of Copper
Copper is undeniably a critical metal, serving as the backbone for the construction of electric vehicles, power grids, and wind turbines. Its importance in the green energy transition cannot be overstated, as it underpins the very infrastructure required for a sustainable future.
Rising Prices and Market Forces
Towards the end of 2023, a report from the BMI Fitch Solutions research unit painted a more optimistic picture for copper prices, forecasting a dramatic rise over the next two years. Factors contributing to this bullish outlook include mining supply disruptions and increased demand driven by the global green transition. Additionally, the value of the dollar could play a significant role, with prices potentially surging if the U.S. Federal Reserve opts to cut rates later in the year.
The Impact of COP28 Pledges
The updated predictions align with the commitments made at the recent COP28 climate summit, where over 60 countries supported a plan to triple global renewable energy capacity by 2030. Achieving this ambitious goal hinges on substantial copper production in the coming years. In fact, higher renewable energy targets could push global copper demand up by an additional 4.2 million tonnes by 2030, potentially propelling copper prices to an unprecedented $15,000 per tonne in 2025.
Supply Disruptions and Deficits
Goldman Sachs has issued a stark warning, predicting a deficit of over half a million tonnes of copper in 2024 due to mining disruptions. In November, production was halted at the Cobre Panamá mine due to a Supreme Court ruling and widespread protests spurred by environmental concerns. Simultaneously, Anglo American, a major copper producer, announced plans to reduce output in 2024 and 2025 to control costs. Goldman analysts firmly believe that the copper market is entering a period of tightening, with prices potentially reaching $10,000 per tonne by the end of 2024.
The Rise of Green Energy Markets
Emerging green energy markets, particularly in South American countries like Chile and Peru, stand to benefit significantly from the growing demand for critical minerals and metals. The heightened demand for copper is expected to drive increased investment in mining operations in these nations while boosting export demand. Chile, in particular, is a key player, boasting around 21 percent of the world's copper reserves. The country's success in the lithium industry, which aligns with the global push for electric vehicles, has also attracted substantial international investment.
A Future Outlook
Despite less optimistic forecasts for the copper market earlier in 2023, year-end outlooks point to a considerably higher global demand for copper between now and 2030. This heightened demand could potentially lead to copper deficits unless governments and private companies step up their investments in mining activities. Ensuring that copper production aligns with demand is crucial to support an accelerated green transition.
Conclusion
As we look to the future, copper's pivotal role in the green energy transition becomes increasingly evident. The metal's demand surge, driven by renewable energy initiatives and electric vehicle adoption, is reshaping the copper market. This transformation presents both opportunities and challenges, as stakeholders must navigate evolving supply-demand dynamics. In this era of sustainable energy, copper stands as a linchpin for progress, driving us towards a greener and more sustainable future.
