As the world strives for a net-zero future, the energy transition relies heavily on widespread electrification and the role of critical minerals. Critical minerals are those essential raw materials necessary for the production of advanced technologies, particularly in renewable energy and electric vehicles, and are at risk of supply disruptions. Among these, copper stands out as indispensable; it is the only mineral used in all major clean energy technologies, making it vital to the energy transition. Energy transition-related demand accounts for approximately 26% of copper’s global usage, with consumption expected to rise by 50% by 2040.
Moreover, copper’s unique properties make it widely versatile across industries. It combines excellent electrical and thermal conductivity, malleability, longevity, and corrosion resistance, positioning it as the metal of choice for a variety of essential applications, of which include:
Electric Vehicles (EVs): Copper is a fundamental component in lithium-ion batteries, essential for EV wiring and a key material in EV motors.
Renewable energy: Due to its conductivity, copper is crucial for electricity networks and renewable technologies like solar, wind, geothermal, and fuel cells. Electricity networks accounted for 15% of copper demand in 2023, with clean energy technologies reaching 25%.
Construction: Copper’s durability makes it ideal for use in plumbing, roofing, doorknobs, and window frames. The construction sector accounted for 30% of copper demand in 2023.
Industrial machinery and equipment: Copper is used in industrial products like gears, bearings, and turbine blades. It is also resistant to demanding environments, including marine applications like oil platforms and power stations.
Artificial Intelligence (AI): As data centers and cloud infrastructure expand, copper remains integral to these systems due to its role in electrical wiring and infrastructure, underscoring its importance in the digital and energy landscape.
A stable copper supply is therefore becoming essential for energy security in a decarbonizing world (Fig. 1).
01 Supply and demand
The demand for minerals essential to clean energy technologies is expected to surge in the coming years. According to the International Energy Agency (IEA), mineral demand related to clean energy could increase by at least four times by 2040, with copper showing the largest growth in absolute terms.
Copper production remains geographically concentrated, with the bulk of supply coming from a few key countries. In 2023, the top three copper-mining nations—Chile, the Democratic Republic of the Congo (DRC), and Peru—together produced nearly half of the global supply, with Chile alone responsible for about 25%. Despite Chile’s status as the leading producer, its copper is mostly refined elsewhere; only 8% of the world’s copper is refined domestically in Chile, with the majority of Chilean concentrate exported for processing, primarily to China.
Refining copper is notably more concentrated than mining it. China dominates copper refining at 45% of total output, the result of a combination of strategic economic policies, resource acquisition efforts, and its position as a global industrial hub. This concentration in refining creates supply chain dependencies and emphasizes China’s strategic role in the global copper market.
02 Current challenges facing copper supply
Environmental and social performance issues
Copper mining, processing, and disposal generate significant levels of pollution, in turn impacting ecosystems and the local communities residing where these activities take place. This mining waste often contains toxic substances, leading to health issues in mining areas. Examples include La Oroya in the Andes and the Bougainville Copper project in Papua New Guinea, where pollution from mining has harmed public health and the surrounding environment (UNECE).
Another challenge is the decline in ore grades at long-established mines, which have already extracted the highest-quality and most easily accessible ore. This depletion forces mining companies to exploit lower-grade deposits, which require more energy and resources to extract. In Chile, for example, the average grade of copper concentrate has dropped by 30% since 2005, meaning extraction has become less efficient. As a result, expanding copper production is becoming increasingly costly, creating the risk of limiting new investment and threatening future supply. Additionally, as ore quality declines, the volume of waste—such as bedrock, soil, and overburden—produced during mining increases, leading to greater environmental impact (UNECE).
Local opposition
The impact of pollution on the environment and society has led to local opposition. Affected communities and governments are increasingly vocal about mining’s environmental footprint, particularly in regions like Latin America, which houses many of the world’s largest copper mines. Indigenous communities in Peru and the Philippines, for instance, have raised concerns about the effects of mining on their land and resources. In late 2023, Panama's government shut down the Cobre Panama mine, which supplies 1.5% of global copper, due to environmental and corruption issues. In Peru, on the other hand, labor strikes and protests by indigenous communities disrupted production at the Las Bambas mine, one of the country’s largest operations. As regulations become stricter and continue to cause the rise of opposition from local communities, new projects face delays or even cancellations and adversely impact the global copper supply.
Economic and structural challenges
In addition to environmental and social issues, economic challenges such as high investment and infrastructure gaps pose barriers to increasing copper supply. Long project development times exacerbate these challenges, as copper mining projects typically require extensive planning, investment, and time to bring into operation. Without long-term investments in infrastructure and development, the copper supply chain may struggle to keep pace with accelerating demand from clean energy and other sectors, as seen in Fig. 3’s forecast.
Figure 3: Global Critical Minerals Outlook 2024
The combination of these environmental, social, and economic hurdles poses significant challenges to copper supply, threatening its ability to support the global energy transition.
03 A clean and fair energy transition
While addressing the supply and demand gap for copper is essential to reach climate targets, it is important to ensure that the energy transition is not only clean but just and sustainable in the long term.
Sustainable practices and recycling
Behavioral change and innovation can participate in reducing demand for new copper. For example, “right-sizing” EV batteries could decrease the need for excessive amounts of materials, offering a pathway to smarter consumption. More broadly, a shift toward a circular economy—where products are designed to minimize waste and maximize reuse—will help reduce reliance on raw materials and extend the life cycle of copper products. Recycling, in particular, will play a crucial role in reducing the environmental footprint of copper and other critical materials. While the lack of available feedstock currently limits recycling efforts, this is expected to change by the end of the decade as the first generation of electric vehicles (EVs) reach the end of their life cycle (IEA). Policies similar to those that promote plastic recycling for individuals and industries—such as enhanced collection systems and investments in recycling technology innovation—will unlock the significant potential of recycled copper to alleviate future supply constraints (BNEF).
Responsible sourcing
Government policies play a crucial role in guiding the energy transition. The European Union has made strides in promoting traceability within the supply chain, exemplified by the introduction of the battery passport, which aims to ensure that the materials used in EV batteries are sustainably sourced (IEA). Progress is also being made through the requirement for Environmental Impact Assessments before companies can obtain mining licenses, ensuring they articulate plans for soil management and restoration after mineral extraction (BNEF).
Moreover, as the demand for copper grows, there is increasing interest in alternative locations of minerals, such as deep-sea mining. The deep sea remains one of the last pristine ecosystems, and disturbing it could have far-reaching impacts on carbon sequestration and ocean biodiversity. The deep sea also plays a crucial role as a carbon reservoir, and even small disturbances could disrupt the delicate balance that helps fight climate change (UNECE). Given the limited understanding of deep-sea ecosystems, more research is needed to assess the potential impacts of mining, and policymakers must enforce stringent regulations to protect these fragile environments.
Diversification of supply chains
The energy transition’s reliance on critical minerals also exposes vulnerabilities in global supply chains. Much of the world's copper mining is concentrated in Latin America, Africa, and Indonesia, while the majority of refining happens in China (Fig. 4). This geographic concentration increases the risk of disruptions caused by political instability, environmental regulations, or economic shocks, as seen during the COVID-19 pandemic when copper mining activities were halted in Peru. In Chile, the Escondida mine alone produces 5% of global copper, highlighting the vulnerability of the copper supply chain to regional instability.
Figure 4: Copper weight flows in 2022 (Resource Trade)
Diversifying supply chains beyond China and ensuring stable sources of copper and other critical minerals is key to safeguarding the energy transition (IEA). The United States and European countries currently own a significant portion of copper mines, but partnerships with Latin American and African countries, where future growth in mining value is expected, will be vital. For example, companies have made a push to restart dormant mines as copper prices reach record highs. However, in Africa, many mines are foreign-owned, prompting local governments to demand a greater share of the proceeds to capture more of the local mineral wealth. For instance, the DRC has begun selling its share of copper from joint ventures directly, which increases revenue for the country. Similarly, Zambia is establishing a state-owned metals trading company to compete with private firms like Glencore (Bloomberg), thereby enhancing its stake in local mining operations. Another example would be Indonesia's restriction on nickel exports, which has pushed local production and allowed it to become the largest producer, potentially serving as a template for African countries to assert greater control over their mining industries (BNEF).
Long-Term vision
Lastly, to achieve a successful long-term vision for the energy transition, it is essential to balance local targets with the overarching goal of reaching net zero, as limiting exports could hinder sustainable growth. This necessitates the implementation of business-friendly policies, including infrastructure development, stable power supply, and predictable long-term regulations, to assure companies that they can recover their investments. For the copper industry to meet the increasing global demand, long-term visibility is crucial. Policymakers must communicate clear signals regarding their climate ambitions and outline actionable strategies to achieve these goals. Moreover, investors will require confidence to commit to new projects that are both financially viable and environmentally responsible, ensuring a robust framework for future growth.
Copper is not just a metal, but a cornerstone of the global energy transition, underpinning the shift towards renewable energy and electric vehicles. As demand for this critical mineral surges, it is essential to address the multifaceted challenges that threaten its supply, from environmental and social impacts to geopolitical dependencies. The future of copper depends on diversifying supply chains, investing in sustainable practices, and fostering responsible sourcing to ensure both environmental protection and social equity. By prioritizing innovation, recycling, and strong policy frameworks, we can create a sustainable pathway that supports the energy transition while safeguarding local communities and ecosystems. The journey toward a net-zero future is complex, but with strategic planning and collaborative efforts, the global community can harness copper's potential to drive meaningful change in international energy systems.