While much has been written about the global supply squeezes on cobalt and lithium which are expected to be driven by the rise of electric vehicles (EVs) and large scale battery storage, a minerals supply chain report by the International Energy Agency (IEA) has highlighted the solar industry's dependence on copper.
Whilst global reserves of the metal are not expected to come under the extreme pressures expected of other raw materials, the IEA's The Role of Critical Minerals in Clean Energy Transitions document has pointed out plans to diversify copper mining with projects in Peru, the Democratic Republic of Congo (DRC) and Mongolia will do little to dent China's domination of the next stage of the copper supply chain: processing the element.
Solar power generation requires twice as much copper as coal-fired electricity, according to the study, mainly because of the electricity transmission properties exhibited by the metal, especially in subterranean and subsea power lines, where it is preferred to the aluminum widely deployed in overhead lines. The IEA report stated the sheer volume of solar generation capacity expected by 2040 would drive soaring demand for new electricity grid infrastructure. The copper content of power lines – plus the fact the metal makes up around 1% of the content of a standard silicon solar panel and around 40% of a rooftop PV system, thanks to its use in string inverters – means the 350 kilotons (kt) of copper used worldwide last year is likely to hit 990kt by 2040. That estimate is based on the IEA's sustainable development scenario; under its more conservative, business-as-usual forecast, copper demand in 2040 would still rise to 800kt, thanks to solar.
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The report examined three alternative scenarios regarding solar which included wider adoption of cadmium-telluride (CdTe), thin-film PV; perovskite-silicon tandem technology; and gallium-arsenide (GaAs) panels. A return to favor of thin-film panels would drive tellurium demand up to 1.4kt in 2040, up from global demand of 500 tons today, as well as supporting a 1.3kt cadmium market, carving a slice out of the current 23kt annual supply. Wider adoption of ultra-efficient GaAs solar tech would require 3.5kt of gallium in 2040, more than ten times the current annual market for the sufficiently high-grade version of the mineral, as well as around a quarter of today's arsenic production – 8kt. If the commercialization of perovskite-and-silicon tandem devices was accelerated to carve out a slice of global solar, it may not have as dramatic an effect on critical materials supply but it would raise demand for lead, noted the IEA.
In terms of the current mainstream solar tech – and it's grid expansion needs – around 30% of the today's copper is extracted in Chile, with Peru, China and the DRC the other biggest suppliers, stated the IEA. Of that global supply, some 30% is carved up between five entities: Chilean state-owned Codelco, Anglo-Australian miner BHP and Anglo-Swiss rival Glencore, Arizona-based Freeport McMoRan and Mexican-owned Southern Copper Corp. Codelco has the largest slice of the pie, according to the IEA, with an 8% global share.
Investment in copper production has been steadily rising since 2010 – albeit with a Covid-related retreat from $18 billion in 2019 to $12 billion last year – and there are plans to diversify production with new deposits in the DRC, Indonesia and the U.S. However, the IEA noted, more investment in production will be needed to meet expected demand as copper mines have an average lead-in time of around 17 years from discovery of deposits to output.
The widespread prevalence of the copper mining industry, and related price stability and maturity of trading markets is counterbalanced by the fact the quality of copper ore at the world's most established deposits is declining rapidly as the most easily accessible sources are exhausted, with the problem compounded by water stress in the world's chief sources of the element.
Even if production expands sufficiently to meet demand, the IEA said, nothing currently being planned will reduce the world's dependence on Chinese operations to refine the ore into processed material.
The Paris-based energy body made six recommendations in its 287-page study into how to ensure sufficient energy transition minerals remain available to enable carbon emission reduction targets to be met around the globe.
Policy support will crucial to drive new supply and technological innovation will help in substituting more commonplace materials for the minerals such as the cobalt and lithium needed for the EV transition and energy storage, and the nickel, zirconium and platinum-group metals required for hydrogen electrolyzers and fuel cells. Tech breakthroughs could also enable the extraction of vital minerals from other sources, such as electronic waste and mining by-products, added the IEA.
Wider, better recycling will be vital to shore up supplies, said the report, and nations could take actions to make their supply chains more resilient, including by stockpiling in some cases, although the IEA pointed out that would not be as effective for minerals with looser supply constraints, such as copper.
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While the IEA's case for tighter environmental, social and corporate governance standards across the board will be welcomed in many quarters, it is hard to understand the economic necessity of such a move, despite claims by the report that such regulation will be essential to keeping the energy transition in operation. Concerns over the damage opening up new mineral deposits could cause are well founded, particularly in a study which touches upon the potential of seabed exploitation, but could complicate the final suggestion made by the report, that international co-operation will be central to secure a sufficient supply of clean energy resources.
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