Copper and Aluminum: Critical Minerals for the Green Energy Transition

 The largest gathering of international copper producers since 2019 is taking place at the World Copper Conference, this week in Santiago Chile. Here, discussions are anticipated to focus on the industry's growing M&A wave amid rising demand and limited supply. 

BHP Group, Rio Tino, Hudbay Minerals have all acquired companies or mines over the last year and recently, Glencore has offered to buy its rival Teck Resources, and Lundin Mining is buying the Chilean copper mine Caserones. As reported by Reuters. 

The focus on M&As grows as stakeholders increasingly oppose the building of new mines. 

The minister of mining for Chile, Marcela Hernando, anticipates a significant increase in copper production over the next several years. Peru anticipates increasing production this year. Much because the metal is a key component in the green energy transition. 

Copper is a critical mineral for several clean energy technologies. In the figure below we can see that is is considered to have a high importance for solar, wind and bioenergy as well as electricity networks, EVs and battery storage. 

Critical mineral needs for clean energy technologies. IEA

We can also see from the figure that aluminum has a high importance for solar, electricity networks, EVs and battery storage. If we also consider the technologies where the metals are of moderate importance, it becomes clear that the two metals are essential for the green transition. 

At the conference in Santiago, a portion of the conference is dedicated to presentations focusing on new applications of copper. This is part of the industry strategy to compete against aluminum, which compared to copper is a cheaper but less efficient in conducting electricity. 

Price development of copper and aluminum. Source: tradingeconomics.com

On Friday copper reached a price of 4.18 USD/lbs, marking a new top after a period of surging prices since the bottom of 3.98 USD/lbs on the 5th of April. 

On April 11th, aluminum reached a bottom of 2301 UDS/t before climbing up to 2387 USD/t before the weekend. Aluminum prices have been declining since the start of the year as a result of the fear of recession and economic downturn. 

It's clear that copper and aluminum are critical minerals for the clean energy technologies. With rising demand and limited supply, the industry's focus on M&A is understandable, but what impact will this have on the environment and communities where these mines and operations are located? And what impact will it have on supply?