Copper prices climb to record highs as demand for the metal surges

Copper prices have climbed to record levels this year, driven by surging demand from electric vehicles, power grids and renewable energy projects. A tonne of the metal is now trading at roughly 13,000 euros on the London Metal Exchange, after a volatile few months, marking a gain of more than 20 percent since the start of the year.

The rally has also caught the attention of criminals. Thieves have targeted solar parks, electric vehicle charging stations and vacant buildings to strip out copper wiring and components, according to industry reports tracking the metal's rising value.

Copper, a reddish-brown industrial metal prized for being both malleable and resistant to corrosion, conducts electricity and heat better than almost any other metal. Only silver outperforms it on both counts, but silver costs many times more, making copper the practical choice for large-scale industrial use.

The metal underpins much of the modern electrified economy. Generators built with copper coils produce electricity, while copper wiring carries it to homes and businesses. The metal is also a core component in electric vehicles, charging infrastructure, batteries, power grids, wind turbines and solar panels. The construction industry relies on copper too, using it for water pipes, roof gutters and shingles.

Forecasts from multiple organizations point to continued growth in demand. The International Energy Agency, a coalition of industrialized nations, estimated that global copper demand reached nearly 28 million tonnes last year. Under a medium-growth scenario, the agency projects demand will rise by a quarter by 2040. The financial services firm S&P Global offers an even higher estimate, forecasting demand could grow by half over the same period.

Much of that growth is tied to the expansion of electric vehicle fleets. An electric car can require up to four times as much copper as a traditional combustion-engine vehicle, according to industry estimates. The buildout of electrical grids is another major driver. The International Energy Agency identified grid expansion in China as the leading factor behind rising copper demand in recent years. Power grids are also being expanded to meet growing electricity needs from data centers, which themselves require substantial amounts of copper wiring.

Whether supply can keep pace with this demand remains uncertain, according to the International Energy Agency's assessment. The agency has warned of a potential supply shortfall of up to 25 percent by 2035. Mining companies have historically extracted higher-grade ore first, leaving lower-quality deposits for later extraction. The mining company BHP estimates that average ore grades at copper mines have fallen by 40 percent since 1991. Building new mines has also become more expensive and typically takes several years to complete.

According to data from the International Copper Study Group, an alliance of copper-producing nations, the largest sources of the metal are Chile, the Democratic Republic of Congo and Peru. China ranks fourth among producing countries. Chile alone accounts for close to a quarter of all copper ore extracted globally.

Copper ore is extracted through mining operations that require significant land, water and energy resources. Depending on the extraction method used, the ore is processed into a concentrate. That concentrate is then melted down at smelting facilities and processed into raw copper. The raw copper undergoes further refining to improve its purity. The final product traded on global commodity markets is known as a cathode. Exchange rules in London require that copper cathodes traded on the market contain a copper purity of 99.99 percent.