The US must go beyond talking about changes to permitting if it wants to meet an expected shortage of copper needed for an energy transition, Richard Adkerson, chairman and CEO of US copper producer Freeport-McMoRan, said at the CERAWeek by S&P Global industry conference.
As demand ramps up from electrification and energy transition technologies, copper supplies are expected to be in an annual deficit by 404,000 mt in 2028, according to S&P Global Commodity Insights’ most recent Commodity Briefing Service report on copper. Speaking at CERAWeek March 18, Adkerson, who will retire as CEO on June 11, said Freeport is looking to “make major investments” in the US, but he also noted that doing so can be a challenge.
If the US wants to increase its copper output, Adkerson said, the government should focus on improving permitting in the US so that companies like his “have a clear way to invest” in new projects rather than trying to subsidize a copper smelter.
“If the US government really wants to build a copper business … if they want to make a valuable copper business here, they need to stop just giving lip service to permitting,” Adkerson said. “Everybody says we’re going to do something, but they need to do something about it. They need to put more resources in it, make decisions quicker, coordinate the state governments because there are overlapping issues there.”
During the same panel, Jeremy Weir, CEO of supply chain company Trafigura Group, noted that changing battery chemistries can swing the balance of supply and demand, presenting a different challenge for the sector. The uncertainty that it creates can make it difficult for miners to pull the trigger on large investments in mines that could take years to permit. For example, he said, the lithium iron phosphate battery has “effectively displaced” a lot of the need for cobalt that supply chains were previously scrambling to secure.
“If you’ve got new supply coming on stream at lower cost, but you’ve also got a technological change so that demand is decreasing significantly, that’s a problem. That’s a real problem,” Weir said.
Adkerson added that he has similar concerns about copper, though affordable alternatives to the metal have not emerged.
“What might happen to copper? [I’m] constantly thinking what could be the shale oil of copper? What could be the technology change that disrupts the basis for our strategy?” Adkerson said. “Whenever I talk to investors I always pose that question. … You have got to be prepared for different things.”
Adkerson also said during the panel that there has been an “over-focus” on the idea of competition between the US and China, noting that China’s demand for copper has gone a long way to supporting higher copper prices globally.
“We’re in a global marketplace here,” Adkerson said. “We need to find common ground where we all can produce. We wouldn’t be operating our mines in the US; they’re such low-grade mines … If we didn’t have China’s demand that grows the price up … to higher prices, our mines wouldn’t be commercial today.”
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