The EV Boom is Accelerating a Copper Crunch

Syllabus: GS3/Economy

Context

• The global shift toward electric vehicles (EVs) is leading to a growing challenge of copper crunch.

About

• Copper forms the backbone of EV batteries, motors, wiring, charging infrastructure, and power grids. 
• As EV adoption accelerates, copper demand has entered a phase of exponential growth that many policymakers and markets have underestimated. 

Expansion of EV 

• Between 2015 and 2025, global EV sales rose from approximately 0.55 million units to an estimated 20 million units.
  • The associated copper consumption surged from roughly 27.5 thousand tonnes to over 1.28 million tons, showing copper to be the hidden backbone of the EV revolution. 
• Therefore, the EV transition must be understood not only as a technological shift but also as a resource-intensive transformation constrained by metals as much as by markets.

Concerns with Rising Demand of Cooper

• Deficit: Copper demand is rising sharply, global supply has begun to plateau, creating a widening gap. 
• Concerns Faced by Major Producers: Declining ore grades at existing mines, decade-long development timelines for new projects, and environmental opposition in major producing regions such as Chile, Peru and the United States constrain supply growth. 
• Future Projection: The gap is expected to widen to 4.5 million tons by 2028 and nearly 8 million tons by 2030, equivalent to the output of the world’s 10 largest copper mines combined. 
• Impact on EV: Such shortages could increase EV costs, delay the development of charging infrastructure, and strain decarbonisation targets. 
• China’s Dominance: China accounts for almost 60% of global EV copper demand.
  • China controls over 70% of global battery cell production and its deeply integrated supply chain.
  • This asymmetry provides China with a structural advantage in terms of pricing power, long-term supply contracts, and strategic leverage over copper-rich regions. 

Way Ahead

• India is currently not self-sufficient in terms of its copper supply.
  • Domestic ore production in 2023-24 was 3.78 million tonnes, 8 percent lower than in 2018-19. 
• Copper is a deep-seated mineral, which makes it more difficult and expensive to explore and mine as compared to surficial or bulk minerals. 
• India must, therefore, develop a strategy to build a resilient copper supply chain that meets its growing needs by optimising various stages of the supply chain.

Source: TH