In its recent Global Trade Update, UNCTAD has identified copper as “the new strategic raw material,” underscoring its pivotal role in the increasingly electrified and digitised global economy. The demand for copper is expected to surge by over 40 per cent by 2040, creating significant pressure on supply chains that are already struggling to keep pace with the rapid adoption of technologies integral to the transition towards renewable energy and advanced computing. Electric vehicles, solar panels, and artificial intelligence infrastructure all rely heavily on copper, making its availability critical.
Recognising this shift, Luz María de la Mora, Director of the International Trade and Commodities Division at UNCTAD, remarked, “Copper is no longer just a commodity,” highlighting its essential position in power systems and clean energy technologies. It is significant not only for its high electrical conductivity and durability but also for its extensive use in homes, automobiles, data centres, and renewable energy frameworks.
The complexities of mining and production present a formidable challenge. Developing new copper mines is a protracted and costly endeavour that can take up to 25 years from initial discovery to operational status. To meet the anticipated demand by 2030, UNCTAD estimates that an investment of approximately $250 billion and at least 80 new mining projects will be required. This daunting figure illustrates the challenges ahead in fulfilling the growing needs of a world shifting towards sustainable technologies.
The geographical distribution of copper resources adds another layer of complexity. More than half of the world’s known copper reserves are located in a handful of countries—Chile, Australia, Peru, the Democratic Republic of the Congo, and Russia. This concentration raises concerns about unequal economic benefits; while these countries hold abundant resources, the majority of value-added production takes place elsewhere, particularly in China. The Asian nation, which imports about 60 per cent of global copper ore and refines more than 45 per cent of copper globally, exemplifies the imbalances in the market.
Amidst these dynamics, UNCTAD cautions that merely exporting raw copper is inadequate for countries rich in resources. To improve their economic standing, these nations need to invest in refining, processing, and manufacturing, thereby enhancing their industrial capabilities. This transition may involve bolstering infrastructure, creating industrial parks, offering tax incentives, and formulating trade policies that favour higher-value production.
An additional hurdle in achieving this industrial uplift is the presence of tariff and trade barriers. The current scenario sees relatively low duties on refined copper—typically under two per cent—drastically increasing to as high as eight per cent on finished products. This tariff escalation hampers investments in higher-value industries, perpetuating the cycle of dependency on the export of raw materials.
Given the lengthy timelines associated with new mining projects, recycling has emerged as a promising solution. In 2023, recycled sources accounted for 4.5 million tonnes, nearly 20 per cent of global refined copper output. Key players in this space include the United States, Germany, and Japan, as major exporters of copper scrap, while China, Canada, and South Korea are significant importers. The report notes, “For developing countries, copper scrap could be a strategic asset.” Investing in recycling and processing facilities could drastically reduce import dependence, bolster value-added trade, and contribute to a more sustainable circular economy.
UNCTAD’s assessment posits copper as a “test case” for global trade systems in how they adapt to soaring demand for critical materials amidst escalating pressures. The organisation concludes that without coordinated trade and industrial strategies, the supply of copper—and by extension, the progress towards a green economy—will remain strained, jeopardising the prospects for many developing nations.
The outlook for copper remains bullish, driven not only by the energy transition but also by the anticipated increasing demand from artificial intelligence technologies. Analysts predict that, without significant investment and timely project completions, demand could exceed supply by as much as one million metric tons over the next three years. This projected shortfall may lead to prices soaring to unprecedented levels, potentially reaching $12,000 per metric ton by 2026.
As the global economy seeks to transition to more sustainable practices, the critical dependence on copper cannot be overstated. Addressing the supply challenges, enhancing recycling initiatives, and fostering equitable economic benefits for resource-rich developing countries will be essential in navigating the future landscape of this indispensable metal.
Source: Noah Wire Services
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