Copper is a driver of the green transition, and copper demand from green applications is expected to grow. Due to the expected increase in copper demand for copper from civil and building construction, electric vehicles (EVs) and renewables, CRU has estimated that global copper use will reach 7.9 million tonnes by 2035, with 65 percent coming from applications associated with the green transition. Wider questions around the ability to meet growing copper demand have raised interest in ongoing and expected trends for copper substitution and miniaturization.
At the 2023 CRU World Copper Conference in Santiago, Chile, the International Copper Association (ICA) hosted a panel “Focus on Substitution,” where experts —ICA Asia Regional Director, Richard Xu; DMM Advisory Managing Partner, Krisztina Kalman-Schueler; and CRU Principal Consultant, Francisco Acuña—provided insights on the impact of recent substitution and miniaturization trends on the copper industry, based on ICA-commissioned research.
Reuters Mining and Future Energy Correspondent, Ernest Scheyder, moderated the discussion that focused on long-term availability, demand pressures and what a green revolution means for copper and the future of the industry.
The panel presented compelling arguments in favor of copper’s continued use well into the future. While substitution is expected to stabilize, miniaturization is on the rise, highlighting new realities for determining an application’s material of choice. Typically, cost has been seen as the most important factor; however, it is now considered just one of many, with system optimization becoming the most important consideration for substitution.
Copper Substitution and its Drivers
While interest in copper availability continues to be a central focus of market discussions, ICA-commissioned research, conducted by CRU, has estimated that the total potential for copper substitution by 2035 will amount to approximately 1.7 percent of total global copper use.
At the World Copper Conference, ICA’s panel experts took a closer look at the drivers of substitution. While copper’s closest substitute is lighter-weight aluminum, Francisco stressed that there is far more to consider than just weight, as “material optimization, natural material properties and demand for greener materials are all factors in substitution trends.”
An example of this can be found in the EV industry, in which there is continuous optimization to increase the efficiency, durability and versatility of its component parts. A material’s range of use in applications is a key informant to system optimization. As Krisztina elaborated, while aluminum has been proposed as a substitute in high voltage EV cables, copper remains a superior conductor, retaining its status as the material of choice. While there have been experiments with aluminum substitution, no alternative has proved advanced enough to replace copper’s natural properties. Designers and installers consider overall system efficiency when selecting the most appropriate material, as “cost and performance are always optimized on the system level, not the material level”. This indicates that the risk of copper substitution in EVs is low.
While substitution may be expected to plateau, miniaturization is likely to increase slightly, reflecting the natural progression of technological advancements. According to Krisztina, “Miniaturization is the more efficient use of copper. OEMs (original equipment manufacturers) and manufacturers are not necessarily directly substituting copper but are using it more efficiently.”
This more efficient use of copper, made possible by copper’s natural versatility and conductivity, can also be seen as a unique value proposition. Richard highlighted that miniaturization does not necessarily mean less copper; instead, it satisfies the need from OEMs for greater efficiency. Drawing on the example of thinner cables in EVs, Richard explained that through miniaturization, the same amount of copper supports more functionalities inside the vehicle.
Enablers and Barriers
Geographical and regulatory factors are two important considerations that act as either barriers to, or enablers of, substitution. As Francisco stated, “growth of consumption will come from new applications. This will change from region to region. When comparing growth trajectories in different sectors, we can’t always apply the same scope.”
All three panelists remarked on the impact of geography. Richard used the example of the heavily industrialized Japan, Germany and China, which have high concentrations of urban high-rise buildings. These countries bear the indirect costs of electricity failures and the impacts of unreliable electricity, which incentivizes choosing more reliable systems. Copper is favored for its reliability; “loyalty to copper comes for a reason, and the decisionmaker, understands the overall economics of making material choices.”
According to the research conducted by CRU, regulatory developments in China, the largest copper market from a demand perspective, and India will continue to support the use of copper in sectors such as infrastructure, energy and transportation, and copper substitution will continue to remain low. In Europe, much of the policy and regulatory focus is on energy efficiency, which is enhanced by copper’s conductive properties, and the European Green Deal will continue to drive the use of copper for green applications.
Alternatively, the U.S. has a price-sensitive market and is at the forefront of new technological developments. Copper substitution may occur if and when technological advancements find solutions that are more efficient than copper. Although some technologies are in the experimentation phase, these developing technologies either continue to favor copper or are not expected to be advanced enough to compete with, or replace, copper by 2035, which was the timeframe covered in the scope of the ICA-commissioned CRU research.
Copper continues to be preferred for its conductivity, malleability, corrosion and for providing energy-efficient solutions. Copper’s natural properties and range of use in applications are barriers to further substitution. Energy efficiency continues to be the preeminent consideration in developing new applications, and this will likely favor copper. Miniaturization is expected to continue rising, as innovations in technological capability and efficiency reflect the natural progression of development.
Francisco suggested that when thinking about the future of copper in a greener economy, stakeholders must consider the importance of decarbonization, particularly in the face of rising energy prices. In his words, “future demand will be determined by energy prices and economics.”
If energy efficiency remains the primary concern for consumers, then copper will remain the material of choice over aluminum. Currently, for primary production, copper has a global average CO2 footprint of approximately 4 tCO2/t compared to aluminum’s 11 tCO2/t, according to CRU. While aluminum is also moving toward decarbonization, it remains a far more carbon-intensive industry.
Renewables will continue to be a major factor determining demand, but as Richard noted, the natural move toward smarter vehicles, smarter infrastructure, smarter manufacturing and smarter cities will bring new drivers for copper demand.
Until next time
A full recording of ICA’s event at the CRU World Copper Conference can be found here. Please be sure to follow the ICA’s social media accounts, @ThinkCopper and LinkedIn, for the latest news.