Thousands of materials and products contain copper, but does that make it a critical mineral?
You can find copper in everything from electronics and wiring to pipes, cooking pans, electric vehicles (EVs), and renewable energy technology. It’s also facing higher demand than ever and is expected to keep growing for the foreseeable future.
Demand is expected to top 50 million metric tons by 2035, double what it is today. But despite the increasing need, copper was on the outside looking in when the United States Geological Survey (USGS) released its 2022 List of Critical Minerals.
What does it take for a mineral to earn the designation? The USGS shed some light on the topic, calling critical minerals:
“…a non-fuel mineral or mineral material essential to the economic or national security of the U.S. and which has a supply chain vulnerable to disruption. Critical minerals are also characterized as serving an essential function in the manufacturing of a product, the absence of which would have significant consequences for the economy or national security.”
Based on these criteria, copper fits the mold. So, what happened?
Before diving into why copper deserves to be on the Critical Minerals list, it’s worth knowing what is on the list accomplishes.
When the Energy Act of 2020 was passed, the USGS was tasked with reviewing and updating the Critical Minerals List every three years. The first list was published in 2018, with a review in 2021 and publish date in early 2022.
Why is making the list such a big deal? Any mineral considered critical is subject to more attention, including streamlined regulations, more investment funding, and more efforts to ensure supplies are available. Currently, 50 minerals are on the list, with ones like aluminum, beryllium, indium, platinum, and tin making the cut.
Like many products imported into the U.S., critical minerals may also be subject to tariffs and duties. Duties and tariffs are taxes designed to protect domestic industries from being hurt by low-cost materials and products from other places. In the case of copper, the duty rate is 1.6%, but for harder-to-source materials in high demand, it could be lower or duty-free. This is something we’ve seen in other minerals, like tin.
Since 2018, 15 minerals have been added to the critical minerals list, including newcomers nickel and zinc. To be considered, potential critical minerals must exceed the agency’s .40 threshold in disruption potential, trade exposure, and economic vulnerability. Though the list has grown since 2018, the agency is considering removing helium, potash, rhenium, and strontium are on the chopping block.
Unfortunately, copper didn’t meet the USGS threshold, leaving it off the 2022 list, scoring a .34 – short of the .40 threshold. That would be the end of the story if not for the fact that people are now asking questions.
The USGS decision struck a nerve with the Copper Development Association (CDA), prompting the group to hire a consultant and redo the study with current data. Using the same criteria, the organization came to a shocking conclusion.
According to the CDA, copper scored .423 on the risk assessment, placing it well above the .40 threshold. The group’s testing also concluded copper’s weighted four-year average is above the line at .407.
How could they come to such different conclusions? The CDA alleges the USGS used outdated data to make assumptions about future use. The organization also believes current situations, including turmoil caused by global tension, could critically impact America’s future.
The response to copper’s exclusion was strong enough for the agency to respond in a FAQ, stating:
“Copper is an important host mineral for other critical minerals, including cobalt, however domestic production mitigates its supply chain vulnerability. Supply risk for copper has been increasing in recent years and it merits watching.”
In other words, copper is potentially critical, but our production offsets some risk. According to data USGS compiled, copper has low disruption potential and trade exposure but high economic vulnerability and rising supply risk. And while supply risk is still relatively low, it doesn’t take much to topple the supply chain system.
Demand is manageable for now, but experts believe the need will grow in the coming years.
Renewable energy and electric vehicles require a lot of copper – EVs need about 2.5 times more than gas combustion vehicles. The electrical grid is also expanding, which means more lines, wires, transformers, and other copper-utilizing products. Without more supply, expansion could slow or pause.
Global competition is also heating up, and copper mining countries like Chile grapple with environmental concerns. On the other side of the coin, the U.S. is dealing with rising tension from copper smelters like China, the world’s largest, and Russia, the fifth largest.
Despite the decision, some people want the country to shore up its copper supply chain.
The CDA suggests the U.S. allocate $100B to close an estimated 4.7-million-ton supply gap expected by 2030. Meanwhile, several prominent lawmakers are also showing concern about the snubbing, including Sens. Kyrsten Sinema (D-AZ), Raphael Warnock (D-GA), Joe Manchin (D-WV), and Mitt Romney (R-UT).
In February, the senators penned a letter to Secretary of the Interior Deb Haaland, writing:
“By recognizing copper as a critical mineral, the United States federal government can more effectively ensure a secure and reliable supply of domestic copper resources in the years to come at all points of the supply chain, including recycling, mining, and processing.”
The lawmakers say conditions have changed since 2018, and copper scarcity is more of a threat. If the USGS doesn’t act, the next update won’t be until 2025.
Unless you have a crystal ball, predicting the future is nearly impossible.
With that said, context clues make it easier to determine what we think might happen. For example, more renewable energy means more copper for wiring, transformers, and upgrades to the existing grid. Other renewable initiatives, like EVs, also strain the supply.
On the other side of the coin, recycling is showing signs of improvement, making us less reliant on new copper supplies. That’s good, considering copper mining grades have declined over the past decade. We also have the issue of opening new mines, which currently takes more than a decade.
Thankfully, USGS isn’t the only organization with an eye on the copper supply. Industries, governments, and end users are watching closely to see what might happen next.
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