The BNEF report is the latest alarm bell for a looming squeeze in the building blocks for the new economy, with key battery components like lithium and nickel also likely to be in short supply. Last month, S&P Global warned of “untenable” copper shortfalls in the coming decade as new deposits become trickier and pricier to develop and current mines face falling ore quality and rising environmental and social demands.
To be sure, big deficits are hypothetical, with higher prices potentially flushing out new supply or slowing the move away from fossil fuels. While stable rules and streamlined permitting will help ensure new projects are completed on time, mining challenges mean the focus shifts to secondary production, with a jump in recycling projected to help fill the gap.
“Investing in technologies related to recycling, lowering costs and improving recovery rates from low-grade deposits could help bring new copper supply online to meet growing demand,” the BNEF analysts wrote.
While copper futures have recovered ground in recent weeks, they’re still down about 18% from an early-June peak amid lingering recession fears. A downturn probably will delay copper demand growth, but it also has the potential to boost investment in supply post-recession, BNEF wrote.
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