The global shift to electric vehicles is transforming markets outside of the automotive industry. One major beneficiary is copper, identified as a key commodity in the production of batteries and chargers for electric cars and other renewable energy technologies.
With demand for the metal expected to remain strong over the next few decades, investing in copper shares and mining companies is anticipated to be a safe option for investors, as long as new projects can maintain the supply levels needed for copper in Australia and worldwide.
Driving the green agenda
As major economies including the United States and China pledge to cut emissions and commit to more sustainable practices, electric vehicle (EV) production will be a cornerstone of this greener agenda, along with other renewable energy systems such as solar panels and wind farms that also rely on copper.
Copper is the most widely used metal in renewable energy technologies, where it has a greater presence than in traditional manufacturing. For example, 83kg of copper is used in the production of an electric car compared to just 23kg in a traditional internal combustion engine vehicle.
Copper demand is expected to grow 600%
The need for copper will see demand increasing nearly 600% by 2030, according to Goldman Sachs forecasts, equivalent to 5.4 million tonnes. With North America's EV market set to grow from $2.7bn in 2021 to $18.6bn by 2030, the amount of copper required for EV production alone is estimated to reach 3.7m tonnes by 2040.
Copper production worldwide must increase to meet this demand. Global copper reserves were estimated at 830 million tonnes in 2019 by the US Geological Survey, with discovered and undiscovered deposits totalling over 5 billion tonnes. However, the discovery of new deposits has declined sharply in recent years, requiring a new focus on exploration and development.
A new copper boom
With existing reserves being inadequate to meet the growing demand, mining companies in Australia and around the world are becoming more ambitious in exploring and tapping promising copper prospects.
One such project is the Udokan deposit, the largest untapped copper deposit in Russia at more than 26m tonnes and one of the largest in the world. Previously considered prohibitively complex due to freezing temperatures and lack of transport infrastructure, production is now expected to begin next year.
Many existing operations are also set to receive heavy investment to increase production. This includes $2.51bn investment in the Tenke Fungurume mine in the Democratic Republic of Congo to double copper and cobalt production to 400,000 tonnes by 2023.
Copper price rise
This high demand for copper across the decade and beyond will be reflected in price growth that should make the metal a promising prospect for investors, both investing in copper itself and in copper mining companies.
Lockley Resources Limited (ASX:LKY)
Barclay Pearce Capital's client, Locksley Resources Limited (ASX:LKY), is an Australian exploration company. They are focused on identifying and assessing opportunities for the acquisition, exploration and development of copper and other mineral resources projects in Australia that have the potential to deliver significant growth for shareholders.
Locksley Resources was incorporated in October 2018 and has acquired 100% legal and beneficial interest in the highly prospective Tottenham Copper-Gold Project.
To keep up to date with Locksley Resources' news and progress, and for more information about copper investment as a whole, subscribe to the Locksley Resources Limited Chairman's List.