From today's SMH........

METALS

Clean energy demand to drive up the price of copper

Lachlan Abbott

Copper prices tumbled to a 19-month low last week as recession fears plagued markets, but demand for the critical metal in the clean energy transition as large deposits become more scarce could lift prices in the long term.

Copper was valued at $US7,521 per tonne on the London Metals Exchange early on Thursday (AEST) and has dropped by more than 20 per cent over the past month from a recent high of over $US9,700 in early June.

The metal is considered a bellwether for the global economy, given it’s the world’s third most used metal which is used across multiple key economic sectors. It is particularly important for electricity transmission needed to decarbonise and connect renewables to the grid, alongside electric vehicle development and charging station infrastructure.

ANZ commodity strategist Daniel Hynes said there was ‘‘a distinct possibility’’ copper may not be as reflective of global economic health in future, despite prices falling recently as concerns about economic growth stalling grew as central banks tightened interest rates this month.

‘‘[Copper] has never had the supply side issues that we’ve already seen and are expecting to get even worse over the longerterm. So price sensitivity could deteriorate,’’ Hynes said.

Hynes said large ‘‘world-class’’ copper deposits were becoming harder to find, forcing miners to ‘‘scour far and wide’’ to for new supply. He added that economic concerns would cause copper market volatility in the near future, but the medium to long-term outlook was ‘‘very, very positive’’.

UBS co-head of mining research Lachlan Shaw said ‘Dr Copper’ would continue to reflect economic conditions broadly, although a ‘‘structural change around decarbonisation’’ would push copper demand and potentially price to historically high levels.

‘‘The vast majority of net zero pathways imply a two to three-fold increase in global electricity demand by 2050, and copper is the best material to transport electricity, so net zero pathways imply a significant structural uplift in world copper demand,’’ Shaw said.

‘‘Copper may actually become a more important barometer, not just of the general economic backdrop, but the pace of electrification needed to decarbonise.’’

Newcrest chief executive Sandeep Biswas said the Australian gold and copper miner believed it was possible that copper supply gaps occur this decade, as the global economy moves towards decarbonisation.

‘‘At the moment, copper represents around a fifth of our business, but the surge in demand and our ability to help meet it means we think it could rise to be around a third of our business,’’ Biswas said.