Robert Friedland on the World's Monumental Shortage of Copper

Copper prices have surged to approximately 14,875 a ton, driven by long-term demand linked to data centers and grid electrification. This year may see the first decline in copper production since 2017, as price volatility has made producers hesitant to increase output.

Robert Friedland emphasizes that Standard and Poor's has labeled copper as the new oil, underscoring its critical role in technology and agriculture. He warns of a monumental shortage of copper, worsened by deindustrialization and inadequate new mining infrastructure. The mining industry faces national security concerns regarding critical raw materials, with production lagging behind rising demand.

Friedland notes that the world is becoming balkanized into competing geopolitical groups, impacting the copper supply chain. He highlights challenges at La Escondida, the largest copper mine, where declining ore grades are predicted to drop to 0.4% within two years. The demand for copper is expected to rise significantly due to the electrification of the global economy and the increasing need for electric vehicles.

To sustain a global GDP growth of 3%, Friedland asserts that we need to mine as much copper in the next 18 years as has been mined in the last 10,000 years. He points out the increasing energy intensity of copper extraction as ore quality declines, alongside rising costs for essential materials like sulfuric acid. Friedland critiques the reliance on China for raw materials, stating that this model is no longer viable.

He warns that the mining industry is generating more greenhouse gases as production methods become less efficient, with increasing energy requirements and decreasing recovery rates. Friedland discusses the worldwide copper shortage, emphasizing its critical role in technological development and the energy transition. He notes that copper prices have risen from four dollars to six or seven dollars, with countries increasingly viewing copper as a proxy for money.

Friedland highlights the mining industry's lack of sufficient capital and technology, which hampers efforts to address the copper shortage. He cites the Resolution Copper project in Arizona, which has been seeking a permit for 35 years, as an example of the bureaucratic challenges faced by mining initiatives in the U.S.

The geopolitical landscape is shifting, with increased military budgets globally and a balkanization into opposing groups. Friedland mentions Japan's military buildup in response to regional tensions, alongside significant military expansions in China and India. He notes that the situation in Ukraine is affecting global resource dynamics and that the U.S. is adopting a more mercantile foreign policy regarding critical raw materials.

Friedland warns that innovating out of the copper shortage will be challenging, as the U.S. technology sector faces constraints in acquiring mining equipment. He points out the U.S. dependence on critical metals developed by China and the interruptions in the supply chain for these materials.

He predicts that the issue of critical raw materials will remain a permanent topic for the next 10 to 20 years, emphasizing the need for the U.S. to reindustrialize sustainably. Friedland expresses concern that the U.S. has lost its competitive edge in critical raw materials and that the financial system's valuation models are not suitable for mining companies.