How the Global Copper Shortage Can Positively or Negatively Affect Mining Stocks

As the global economy undergoes monumental shifts towards green technology and infrastructure, the demand for copper—a fundamental component of electrical systems and renewable energy projects—has surged. This heightened demand has led Goldman Sachs’ metals research team to cast a spotlight on an impending crunch: the copper deficit.

It is rumored that by the end of this decade, the world could face a staggering copper deficit of 5 million tonnes (Mt). Even at present, deficits are already measured in the hundreds of thousands of tonnes. The implications are profound, not just for industries reliant on copper, but for national economies and the global push towards a more sustainable future.

Central to this conversation is Fortescue Metals Group’s (ASX:FMG) share price today has dropped by 1.18% but the slight decline does not show the 1Y growth at 24.02%. Fortescue’s chairman, Andrew Forrest, who is currently under pressure to pivot resources towards developing new copper projects. Amidst the backdrop of rising copper prices—a signal of its scarcity and vital role—the sector is rife with expectations and speculation on how companies like Fortescue will respond. Fortescue is a mining stock that should be watched, to see how it will deal with the shortage.

Technological innovation is often the knight in shining armor in such narratives; however, in the case of the looming copper crisis, it may not wield enough power. Despite promising advancements in new leaching technologies, which are anticipated to contribute an annual production of approximately 1Mt by the decade’s end, these advancements are insufficient in addressing the predicted 5Mt shortfall.

Goldman Sachs, which closely monitors advancements in the field, notes that among the 10 novel leaching technologies under observation, only four are commercially viable. These include BHP’s Full SaL chloride technique and Bioleach, methods that could potentially revolutionize copper extraction if adopted at scale.

Yet, without a significant technological leap forward, the United States and the broader Americas face the prospect of diminished cathode production by 2030. In contrast, China is forging ahead, rapidly expanding its refining capacity and positioning itself to potentially weather the copper scarcity more effectively.

The hope of new technologies, such as enhanced primary sulphide leaching, could potentially unlock an estimated 1.2Mt per annum of copper. Nevertheless, these innovations are entangled in their own web of challenges—substantial upfront costs, the need for extensive commercial-scale demonstrations, and regulatory hurdles.

While technology might shorten the gap, the copper conundrum is a multi-faceted issue that resists easy fixes. The world’s copper supply chain is under siege, with financial analysts, industry leaders, and policymakers alike grappling to find a path forward. As the decade progresses, the race to solve this crisis will undoubtedly intensify, underscoring the dire need for a confluence of strategic mining investments, policy reforms, and scientific breakthroughs to stave off the worst of the copper shortfall.