Infrastructure News

Starting of Copper 2.0 era, Infra News, ET Infra


Call it what you like, “the metal of electrification,” a “critical element for decarbonisation of the economy” or the “lithium of the future,” but the critical role of copper in energy transition and meeting the net-zero emissions target of different nations, can hardly be ignored or discounted.

Its uniqueness lies in the fact it is easily stretched, cast, and shaped, corrosion resistant, recyclable, has excellent alloying properties with other metals and is also a good conductor of heat and electricity.

Thus, going green means using more copper-intensive technologies like electric vehicles (EVs), renewables, solar PV, and wind turbines. Moreover, it will call for higher investments in power grids to support electrification. Overall, these sectors will need an additional 12 MMt per year (MMt/y) of copper by 2035, points out an S&P Global report titled “The Future of Copper: Will the looming supply gap short-circuit the energy transition.” These sectors will see double-digit annual growth rates in copper demand over that period.

Hence, copper demand is projected to grow from 25 million metric tons (MMt) in 2022 to about 50 MMt by 2035, a record-high level that will be sustained and continue to grow to 53 MMt by 2050, argues the report. The potential supply-demand gap is expected to touch 9.9 MMt in 2035, if the current trends in capacity utilisation of mines and recycling of recovered copper continues.

In fact, the International Monetary Fund (IMF) issued a warning saying that striving to achieve net zero target by 2050 “is likely to spur unprecedented demand for some of the most crucial metals,” leading to price spikes that “could derail or delay the energy transition itself.”

Such a trend could mean a 20% shortfall in supply required to achieve the net-zero emissions target of 2050 necessitated by the increased demand for electric vehicles (EVs), power infrastructure, and renewable generation, adds the S&P report.

Take the issue of power transmission and distribution (T&D) in a green-powered future world. Copper is the go-to material for nearly all types of electrical wiring, power distribution and transformers, particularly for underground and subsea lines.

While aluminium can be a good substitute for copper for high-voltage overhead lines, the same is not the case for underground and subsea lines because of higher maintenance and technical deficiencies.

Today, copper usage in T&D applications represents close to 20% of current copper demand but to achieve net-zero emissions by 2050 by developed countries will require doubling of investments in T&D infrastructure between 2022 and 2040 to produce more copper.

The demand for copper will be driven by factors such as higher penetration of distributed renewable generation in the country. It means creating a larger number of smaller renewable generation facilities to cater to the local population in remote areas, as opposed to a smaller number of conventional large-scale generation plants. These smaller units will require T&D infrastructure to reduce intermittency in generation from solar and wind energy and provide distribution networks.

Similarly, the increased popularity of rooftop and industrial solar plants for private consumption will mean the installation of smart meters to manage the flow of electricity back to the grid. The electrification of the transportation sector will require significant investment in distribution infrastructure like charging facilities and the up-gradation of aging infrastructure. Improving resilience of the transmission system in the face of physical and cyber threats is a must.

India, too, will soon have a modern and smart power transmission system with real-time monitoring and automated operation of grid, which can handle increased share of renewable capacity, enhanced utilization of transmission capacity and greater resilience against cyber-attacks and natural disasters.

These recommendations, made by a task force set up by the Power Ministry in September 2021 under the chairmanship of CMD, POWERGRID, has been accepted by the government.

Yet, India like the world faces the demand-supply challenge in this critical metal. Credit rating agency ICRA, estimates that India’s refined copper consumption will grow by 11% in the current (2023-24) and in the next fiscal year.

The supply has been especially hard hit with the closure of the Vedanta’s Sterlite copper smelter plant in Thoothukudi in Tamil Nadu with a capacity of four-lakh metric tonne.

The resultant gap in the domestic market is being met by increased imports of refined copper or of finished copper products.

In the fiscal of 2023 (2022-23), the imports of refined copper jumped by 30% and another 180% in the first six months of the current fiscal year (FY24).

The race to meet the Paris Climate goals deadline will intensify global competition for raw materials. The challenge is far more intense because while the copper mines are concentrated in two countries—Chile and Peru—, which account for 38% of world production, China leads in annual copper mine production and ownership of global mining, smelting, and refining assets.

However, to meet the challenge of copper supply and achieve its zero-emission target of 2070, the country will have to double down on finding new copper mines either in India or abroad and also need to augment its domestic smelter capacity to produce enough refined copper. Reopening the Sterlite smelter plant can be an easy solution.

(This article has been written by Shishir Choudhary, Economist & former HoD, Economics Department, St. Xavier’s College, Ranchi)

  • Published On Jan 15, 2024 at 01:57 PM IST

Join the community of 2M+ industry professionals

Subscribe to our newsletter to get latest insights & analysis.

Get updates on your preferred social platform

Follow us for the latest news, insider access to events and more.


Source link