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Copper 101

Copper is a chemical element with the symbol Cu (from Latin: cuprum) and atomic number 29. It is a soft, malleable, and ductile metal. Copper is one of the best conductors of heat and electricity, and is used extensively as a building material, in electric motors, plumbing, and as a constituent of various metal alloys, such as sterling silver used in jewelry and coins. A typical home has about 500 pounds of copper in it, while a car with an internal combustion engine has about 40 pounds. An electric car has about 180 pounds.

The most common substitute for copper in wire is aluminum. However, copper is preferred as it conducts significantly better and is less prone to breaking. 

In 2021, Canadian mines produced 521,000  tonnes of copper in concentrate, representing a 9% decrease from 2020. Canada’s total exports of copper were valued at C$4.5 billion that year. World production of copper is expected by many to remain stable or fall slightly over the next several years, while consumption is expected to increase unless there is a worldwide recession.

In May, 2022, Goldman Sachs metals strategist Nick Snowdon indicated that he believes the global renewable power drive will push copper prices from the current US$4.29 per pound to US$6.80 per pound by the end of the decade. He adds that the fundamental supply and demand outlook is so dire that he doesn’t rule out an “absolutely ballistic” temporary price spike to over US$20 per pound before 2030. For Mr. Snowdon, the expected supply shortage “is not resolvable at current prices,” meaning that prices are too low now to spur the necessary investment in new production. Decarbonization will not be possible without much higher copper prices first.

The commodity price has been weaker of late, down 11.5 per cent from the five-year high hit in March of this year. Goldman Sachs attributes this to lower demand from a lockdown-ed China and higher-than- expected exports from Russia.

Sources: The Globe and Mail - June 1, 2022, Natural Resources Canada, Canadian Mineral Production published July 2022


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