China green energy shift will require abundant copper

The People’s Republic of China has pledged largely to shift away from coal and petroleum to cleaner, more renewable and more carbon-neutral energy sources by 2060. A consultancy has calculated it can do this—but it will require an abundant amount of imported copper. Other metals on China’s anticipated menu include aluminum and electric vehicle (EV) battery metals such as lithium and cobalt.

A seven-chapter research report Huang Miaoru, Gavin Thompson and Zhou Yanting of United Kingdom-based Wood Mackenzie includes a section forecasting how much copper and aluminum it will take to upgrade China’s EV output, bolster its EV charging network and engage in other wire- and cable-intensive changeovers.

“Electrification means energy by wire, and that requires metals, particularly copper and aluminum,” the authors write regarding “ensuring a secure and competitive supply of raw materials” for the massive energy changeover.

They continue, “China needs to expand its domestic ultra-high-voltage transmission networks. Copper is China’s Achilles’ heel. Essential for electricity transmission, wiring and wind turbines, the country’s domestic and overseas equity production of mined copper is just 16 percent of what it needs, leaving it net short to the tune of 7.5 million metric tons per year at current demand levels.”

It is unclear to what extent the report considered growing red metal scrap availability within China as a source of copper. Between now and 2060, more end-of-life vehicles (ELVs) and demolished buildings are likely to yield additional secondary copper there. China’s government recently reopened the door to copper scrap imports, in a move that has quickly ramped up the demand for and pricing of red metal scrap.

Newly mined copper is likely to play the largest role, but the trio write, “Despite a decade of Chinese investment in overseas copper assets, Western mining majors continue to dominate. One alternative might be to increase the use of aluminum, despite its less efficient electric conductivity.”

The nation’s government also has reopened the door for aluminum scrap imports, and the Mackenzie Wood researchers write, “China has abundant domestic bauxite resources, albeit of lower quality than Western alternatives, [but] reducing dependence on imported copper remains a major challenge.”

Ripple effects are likely to go beyond strained supplies and high prices in the global metal markets, the consultancy says. The authors write that “greater recovery and recycling will be mandated,” though in most economic systems, high metals pricing will incentivize scrap collection to reach a 95 percent target rate mentioned by Huang, Thompson and Zhou.

The trio also sees “big challenges further out for lithium, cobalt and nickel supply. International miners can target lithium and nickel, but cobalt – and the Democratic Republic of the Congo – is certainly a challenge. New production from Australia and Indonesia is expected, however.”

The full text of the report, “Tectonic shift: China’s world-changing push for energy independence,” can be found on this Wood Mackenzie web page.