Copper is essential for the transition to green energy, but there is a significant shortage of the red metal in the world.
Earlier this year, mining company Rio Mining Group opened its new copper mine in the Gobi Desert, after four decades of work, according to Bloomberg.
The Oyu Tolgoi mine, in southern Mongolia just north of the Chinese border, is key to the company’s efforts to reduce its reliance on iron ore and expand into copper, the metal that underpins the green energy transition.
It is also a major deposit whose corporate, political and technical challenges provide a glimpse into the future of the red metal.
Expensive and technically complex As demand for copper increases, supply is likely to come increasingly from mines like this one on the dry steppe and deep underground.
That is to say, they are expensive, technically complex, outside traditional copper jurisdictions and in countries where governments jealously guard their natural resources.
“It’s an enormous crisis,” said Doug Kirwin, one of the earliest geologists to work at the deposit that became Oyu Tolgoi.
“There’s no way we can deliver the amount of copper over the next 10 years to drive the energy transition, it’s not going to happen.”
Analysts at Wood Mackenzie estimate that in a greener world, there will be a shortage of six million tonnes of copper in ten years’ time, equivalent to 12 new mines in the same class as Oyu Tolgoi.
Shortage of copper and mines
But there simply aren’t enough new mines, let alone large enough ones.
Bloomberg NEF estimates that demand for copper will grow by 53% by 2040, but mine supply will only rise by 16%.
The world’s mining companies are not standing idly by, however.
The looming shortage of green metal has led to Glencore Plc’s bid for Teck Resources Ltd, a long-time copper miner, and gold miner Newmont Corp’s record bid for Australian gold and copper miner Newcrest Mining Ltd.
BHP Group Ltd has just completed its acquisition of copper producer Oz Minerals, its largest deal in over a decade. Back in November 2022 BHP CEO Mike Henry argued that ‘the world’s not going to run out of copper. We can be very confident about that…there’s more than enough units in the ground to meet the world’s need for those commodities.’ However, there can still be a mismatch in demand and supply.
Mega-deals are not enough
Even if these deals go through, they will not alleviate the world’s shortage of copper.
And starting a new mine is still expensive, complicated, and takes many, many years.