Global copper shortage may continue until 2030

Global energy consultancy Wood Mackenzie believes copper shortages will hit global markets throughout 2023, and the shortage could persist until 2030.

The world is currently facing a copper shortage due to increasingly tight supplies in South America and rising demand pressures. Because copper is used in everything from electrical equipment to industrial machinery, copper is a leading indicator of economic health.

Copper shortages could herald rising global inflationary pressures, forcing central banks to maintain hawkish stances for longer.

"We're already forecasting a significant copper deficit by 2030," said Robin Griffin, Wood Mackenzie vice president of metals and mining. Demand for copper rises.

He added: "As long as there is political unrest, there will be a range of effects. The most obvious one is that mines may have to close."

Peru accounts for 10% of global copper supply. Commodities giant Glencore announced on January 20 that it was suspending operations at its Antapaccay copper mine in Peru after protesters looted and set fire to it.

In addition, Chile - the world's largest copper producer, accounting for 27% of global supply - production fell 7% year-on-year in November.

"Overall, we believe Chile's copper production is likely to decline between 2023 and 2025," Goldman Sachs wrote in a separate note on Jan. 16.

Copper plays an important role in power-related technologies as well as in energy transition proposals. China's reopening and growth in the automotive and energy transition sectors have boosted demand for the red metal, putting further pressure on copper resources.

Sales of electric vehicles more than doubled in 2021, bringing the global total to around 16.5 million, according to the International Energy Agency. This means that the EV charging ecosystem will have to be strengthened.

Wood Mackenzie's Griffin said: "In the energy transition (industry), there is a longer-term problem with the supply of copper, because the growth in both cars and transmissions will be huge."