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Metal Miner

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New EV Innovations Put A Dent In Copper Demand

  • Goldman Sachs & Consultancy CRU Group have revised their forecasts for copper usage in EVs, predicting a decrease due to improvements in EV design and efficiency.
  • Copper is primarily used in EV wiring, but advancements aimed at enhancing range, reducing weight, and improving efficiency are leading to decreased copper usage per vehicle.
  • While copper demand for EVs is still high, with an expected reach of 1 million metric tons this year, challenges in copper-producing countries and potential over-predictions may influence future production and demand.

Via AG Metal Miner

 

Two firms, Goldman Sachs & Consultancy CRU Group, recently revised their forecasts for copper usage in electric vehicles (EVs). Indeed CRU Group now predicts that the average EV will use between 51-56 kilograms of copper from this year to 2030. This is a significant decrease from their previous estimate of 65-66 kilograms. Similarly, Goldman Sachs predicts that the amount of copper in an average EV will decrease to 65 kilograms per vehicle by 2030, compared to their previous estimate of 73 kilograms last year. These figures are important, as EV components remain one of the primary copper uses.

While global demand for copper remains high, miners’ strikes and supply issues tempered supply significantly. Now, these new reports add a whole new twist to the saga. Indeed, both reports mentioned that a renewed focus on efficiency in EV design among Tesla and other automakers continues to decrease the amount of copper used in each car. This could have big implications for copper demand as the next generation of EVs enters the market. Analysts still anticipate the sale of EV’s in countries like China and India to climb in the next few years. However, these advancements in EV technology are seen as a limiting factor in terms of copper usage. 

Previous Copper Usage Expectations May Be Overblown

Copper mainly goes into the wiring of EVs. In fact, on average, EV’s require four times more copper than traditional combustion engine vehicles. However, EV and battery manufacturers continue to find new ways to reduce weight and costs. As indicated by the two reports, these efforts caused decreases in the amount of copper required per vehicle. These revisions mainly stem from engineering changes aimed at enhancing range, reducing weight, and improving the efficiency of EVs. Some of these changes include utilizing more compact batteries, thinner copper foil in battery cells, and higher voltage systems that require less wiring.

Goldman Sachs also highlighted the potential shift to higher voltage systems, such as those employed by Tesla, as a significant threat to copper demand in the EV market. Still, the investment bank expects copper demand for EVs to reach 1 million metric tons this year and 2.8 million metric tons by 2030. However, some industry analysts caution that previous projections of copper demand for green energy were overly optimistic. In many cases, these over-predicted copper uses in new technology.

Some Copper Producing Countries Face Production Challenges

On July 10, copper prices saw a drop at the London Metals Exchange (LME) due to surprising inflation data from China. Three-month copper futures initially dropped by 0.1% to $8,364 per ton following a modest weekly profit. Data indicated that Chinese factories continued to face challenges in June, despite minimal change in consumer prices and new copper uses.

Meanwhile, Chile, the leading global copper producer, reported a 3.6% increase in copper exports in June this year as compared to the previous year. This put the total value of the exports at U.S. $3.88 billion. Close rival Peru also reported a substantial increase of nearly 35% in May this year compared to 2022. Most analysts attributed this surge in production, which reached 234,781 metric tons, to the efforts of mining companies such as Cerro Verde, Antamina, and Southern Copper, who significantly ramped up extraction.

That said, a Reuters report said excessive bureaucracy in Peru still poses significant challenges for copper miners. Indeed, Peru continues to grapple with political instability, frequent changes in government, and declining investments. Recently, this allowed the Democratic Republic of Congo to emerge as a formidable competitor.

This year, analysts predict mining investment to decline by 20%. Meanwhile, industry executives continue to voice concerns that complex bureaucratic processes are impeding new projects, potentially jeopardizing future copper output. Over the past two decades, the number of administrative procedures required to initiate mining projects surged to 230. According to the report, many of these tasks involve multiple authorities, hindering progress and stalling development.

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By Sohrab Darabshaw

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