While critical mineral supply chain security has become more than an obscure concept these days, many people will still associate metals like lithium, cobalt or maybe rare earths with it, rather than some of the more mainstay metals. However, that does not mean we should not be worried about their supply.
As Dario Pong, founder and managing director of Ferro Resources, a Hong Kong-based automotive ferrite magnet company operating in mainland China, told attendees during a panel discussion on supply chains at a conference organized by the think tank branch of Saudi Arabia’s sovereign wealth fund in Hong Kong earlier this month, he is more concerned about copper and nickel, stating that “[t]here is enough rare earth in the world. There is also enough cobalt in the world.”
But with regards to copper and nickel he said:
“These are the big-ticket items, not the so-called minor materials, and China is also worried about not having enough copper and nickel. That is why China is working together with the world to secure that.”
As governments around the globe place more emphasis on securing critical mineral supply chains, China has a leg up on the West because, as Pong says, the country planned for the run on critical minerals before the West began focusing on it. While China has scarce copper resources, Pong says that Beijing has close trade relationships with its main suppliers from Latin America (including Chile and Peru) along with Kazakhstan, Mongolia and Central Africa, and has made significant strategic investments in these leading copper mining countries, while “[t]he West has overlooked their manufacturing sectors in the past few decades.”
Indeed, as followers of ARPN well know, China has, through decades of strategic planning, achieved a stranglehold on most segments of the supply chains for many critical minerals. Copper may not be as flashy as some of its peers – but, as followers of ARPN well know, it is also an indispensable component in green energy technology, and demand for the “metal of electrification,” as it has been dubbed by the Financial Times, is expected to increase drastically to keep pace with the material requirements of the global push towards net zero carbon emissions.
While U.S. import reliance for copper hovered around 30 to 35 percent in the 2010s, that number has gone up to more than 40 percent in the 2020s, according to the USGS Mineral Commodity Summaries.
Miners are pointing out that a confluence of complex permitting timelines, rising inflation and the fact that the commodity is “harder to find in high quantities in the ground” may have led to a situation “where it’s likely there won’t be enough copper to meet decarbonization goals in the next few decades.”
And with China “tightening its grip on copper” as Bloomberg News phrased it recently, there is potential for more competition and confrontation between China and the West, an already fraught relationship, on the horizon.
Perhaps now would be a good time for the U.S. Government to revisit its omission of Copper from the latest Critical Minerals List. The Department of Energy has already opened the door by adding the metal to its 2023 Critical Material Assessment list – USGS only needs to walk through it.