Copper's Quiet Crisis: The Metal the Energy Transition Can't Do Without

In January 2023, protesters in Peru set fire to Glencore's Antapaccay mine, forcing the operation to suspend production. It read at first like a local political flashpoint. Look closer and it exposes a much bigger structural problem: a large share of the world's copper supply sits in a small number of politically fragile countries, at exactly the moment global demand for the metal is set to accelerate.

Almost nothing in decarbonization infrastructure works without copper. Solar installations, wind turbines, grid cables and battery storage systems are all copper-intensive, and none of them currently has a technically or economically viable substitute waiting in the wings.

A Demand Curve Outrunning the Mine Pipeline

The scale of the projected gap is what makes this story different from a routine commodity cycle. Annual copper demand is projected to climb from roughly 25 million tonnes today to 36.6 million tonnes by 2031, according to McKinsey & Company, while supply over the same period is forecast to reach only around 30.1 million tonnes – a shortfall of 6.5 million tonnes that existing mining projects are not positioned to close. S&P Global Market Intelligence puts the longer-term picture in even starker terms, projecting an annual deficit of up to 50 million tonnes by 2035. That’s more copper than humanity consumed in total between 1900 and 2022.

Part of what's driving the gap is the energy transition's own appetite for the metal. Green applications accounted for roughly 4% of global copper consumption in 2020; that share is expected to more than quadruple to about 17% by 2030 (source: Goldman Sachs). In other words, the technologies meant to solve the climate problem are themselves adding meaningful pressure to the metal shortage that could slow their rollout.

A Supply Base Concentrated in Fragile Territory

The more consequential part of this story is where the copper actually comes from. Chile alone supplies around 27% of global output but has seen production decline, with analysts flagging further softness through 2025. Peru contributes another 11% and has been repeatedly disrupted by political unrest — the Antapaccay suspension being one visible example of how quickly instability there can translate into lost tonnage. More than half of the roughly 20 million tonnes mined in 2020 came from countries classified as "unstable" or "extremely unstable."

What This Means for the Market

For industrial commodity dealers and manufacturers with copper-dependent supply chains, the practical implication is straightforward: structurally tighter supply combined with higher price volatility whenever a major producing country stumbles, whether for political or operational reasons. As one commodities analyst put it in 2023, the global copper market is "entering an age of extremely large deficits." That creates a two-sided picture for resource investors — real cost risk for copper-intensive industries, but also an opening for capital directed toward mine development, recycling capacity and copper-substitution technologies.

Whether the deficit narrows meaningfully depends on a few open variables worth tracking: how quickly recycling from discarded electronics and end-of-life equipment scales up, how fast copper-efficient technology designs reduce demand per unit of renewable capacity installed, and whether new deposits in central Africa can be brought online faster than South American output continues to soften. Anyone exposed to copper-reliant markets should keep these offsetting forces in view rather than assume the shortfall resolves on its own.

This article draws on reporting published by DNV, "The Role of Copper in the Energy Transition," DNV, September 20, 2023 URL: https://www.dnv.com/article/the-role-of-copper-in-the-energy-transition-247342/