U.S. Copper Demand Set to Surge Amid Electrification Plans and Supply Chain Risks

Rising Copper Demand to Double by 2035
As the U.S. moves toward electrification, the demand for copper is projected to rise dramatically. S&P Global Market Intelligence predicts that by 2035, the demand for copper will be 12% higher than pre-Inflation Reduction Act (IRA) levels, driven by the energy transition, electric vehicles (EVs), and renewable energy. This surge will result in copper demand doubling the current consumption rates. The study highlights the crucial role of copper in powering the future energy grid, but also points out that even with efficient recycling, this rise in demand will require an increase in mining activities.

Supply Challenges: Domestic Production and Imports
Despite having significant copper reserves—around 70 million metric tons of untapped resources—the U.S. faces substantial challenges in meeting its growing copper needs. The time-consuming permitting process means that new copper mines could take up to 20 years to come online. Currently, the U.S. imports about 44% of its copper, mainly from Latin American countries such as Chile, Peru, and Mexico. This reliance on foreign sources poses a risk, as geopolitical and supply chain disruptions could threaten future copper imports.

Geopolitical Risks and Panama Canal Vulnerability
One significant vulnerability in the U.S. copper supply chain is its dependence on the Panama Canal, which handles 95% of U.S. copper imports. Climate change-induced disruptions, such as low water levels in the Canal, could strain the delivery of copper to the U.S. market. Additionally, the growing demand from other nations, including China and Western Europe, could further limit the availability of copper imports from Latin America, where the U.S. is already competing with China for copper.

A Multi-Pronged Strategy for Copper Supply
To meet the surge in copper demand, S&P Global stresses that a single solution will not suffice. A combination of increased domestic copper production, improved mining technologies, expanded import support from new trading partners, and even material substitutions will be necessary. However, copper remains irreplaceable for many sectors, especially for EV batteries, wind and solar energy, and grid infrastructure.

Policy Recommendations for Securing Copper Supply
The Copper Development Association (CDA) has called for copper to be classified as a critical mineral by the U.S. Geological Survey, ensuring it receives the same support as nickel, lithium, and cobalt. The CDA strongly supports the Critical Mineral Consistency Act, introduced in October, which aims to align critical mineral definitions between the U.S. Geological Survey and the Department of Energy. The Act would grant copper access to vital federal programs, ensuring the U.S. is better prepared to meet the rising demand for copper while reducing reliance on foreign sources.