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Low potential for copper substitution

April 17, 2019
553

Research presented by the DMM Advisory Group last week at the World Copper Conference in Santiago, Chile, found only a minor substitution rate of copper in 2018, at 0.8%. This is welcome news for copper producers who face an uncertain demand future, mainly due to a Chinese economic slowdown.  

Aluminum: a copper substitute?

Research and development into copper alternatives gained significant traction almost a decade ago when copper traded as high as USD$10,000 per ton in 2011 (compared to USD$6,500 today). Although copper is the most conductive metal after silver, many manufacturers and utility companies considered a shift to aluminum, which traded as low as USD$2,500 in 2011. 

While cheaper and lighter than copper, aluminum is only 60% as conductive, more corrosive, and more brittle. However, in 2011, automobile manufacturers such as Toyota and Honda successfully used aluminum wiring harnesses in their vehicles to reduce weight, while air conditioning manufacturers began selling more units with aluminum coils instead of copper to reduce costs.

Nevertheless, only a few manufacturers ended up making a significant switch to aluminum as many of the inherent challenges could not be overcome. Kalman-Schueler who headed the study at the DMM Advisory Group, found that the world’s largest consumer of copper, China, had a substitution rate of only 0.6%. 

According to Kalman-Schueler, most Chinese manufacturers are not interested in switching to a metal that hasn’t been tried and tested. “A number of companies don’t want to face the risk of failure of the appliances not delivering the performance that is expected of them” she said. Kalman-Schueler added that copper-aluminum substitution requires major investment which “At the current cost level, just does not make sense”. 

Future potential for substitution

Increased adoption of electric vehicles (EVs) are expected to make a significant impact on copper demand from the mid-2020s onwards. EVs are estimated to use two to four times as much copper compared to conventional combustion vehicles. 

While research has been conducted into replacing copper with aluminum in lithium-ion batteries currently used in EVs, they have been unsuccessful because lithium alloys to aluminum at low temperatures. According to Na Jia, a technology analyst at IDTechEx, there is currently no alternative for copper in lithium-ion batteries as “Other metals are either too expensive or too heavy.” 

Luke Viljoen is a project manager in the extractives sector with several years broad experience in exploration and mining across Africa. He specializes in helping companies solve complex issues in challenging environments. Connect with Luke on LinkedIn or email him directly on lukejv{at}gmail.com

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MiningIR hosts a variety of articles from a range of sources. Our content, while interesting, should not be considered as formal financial advice. Always seek professional guidance and consult a range of sources before investing.
James Hyland, MiningIR
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