Western countries’ efforts to reduce reliance on China for copper could inadvertently delay the energy transition and increase costs, according to a report by Wood Mackenzie. China currently dominates the global copper supply chain, a critical component in technologies such as renewable energy, energy storage, and electric vehicles. 

As nations like the U.S., Canada, Australia, and European countries attempt to diminish China’s control through subsidies and investment, Wood Mackenzie highlights a potential conflict between decarbonization goals and reducing dependence on Beijing. The report suggests that achieving these dual objectives could be challenging. 

Wood Mackenzie projects that replacing China’s copper processing and fabrication capacity would require hundreds of billions of dollars in new investments. Demand for copper is expected to surge by 75%, reaching 56 million tons by 2050. This increase could result in higher prices for finished goods and complicate the energy transition process. 

The International Energy Agency estimates that existing mines and projects will fulfill only 80% of copper needs by 2030, indicating a possible shortage. While initial copper mining primarily occurs in the Americas and Africa, China’s share of global mining is relatively small, though it rises when including overseas assets. Despite this, China will still need additional supplies to meet its demands. 

Wood Mackenzie notes that the copper supply chain includes several crucial phases: mining, smelting and refining, fabricating, and manufacturing. China’s dominance in downstream processing and manufacturing far exceeds its mining capacity. Since 2000, China has accounted for 75% of global smelter capacity growth and 80% of new copper and copper alloy fabrication capacity. 

Nick Pickens, Wood Mackenzie’s research director for global mining, emphasizes that while diversifying away from China is crucial, a complete replacement of its role in the supply chain is impractical. He suggests that pragmatism and potential global trade concessions will be necessary to meet net-zero goals without imposing excessive costs. 

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