Higher prices and more government support will be needed for recycling to ease the next copper shortfall, Australian bank Macquarie said.
As demand increases due to advancing electrification, with primary production limited due to underinvestment, the market is predicted to drop to a surplus of 3Mtpa by 2030.
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About 9 tons of copper are recycled every year, compared to a current demand of 31 million tons per year.
For years, commodities experts have warned of a copper crunch.
BloombergNEF estimates that demand will increase by more than 50% from 2022 to 2040.
“Copper typically is used as a construction metal for wiring for building, wiring for machinery and what not, but if we look at the decarbonization net zero energy transition trend, copper is the new oil,” Al Chu, who manages the BNY Mellon Natural Resources fund, told CNBC.
Copper has the longest recycling history of any material. It is estimated that in the last one hundred years, two-thirds of the 690 million tonnes of copper produced are still in productive use.
On average, copper products contain more than 30% recycled content, according to the Copper Alliance.
The production of recycled copper consumes 85% less energy than that of primary copper.
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