May 24, 2023

Predicting copper shortage, major cable supplier urges increased recycling

Jerome Leroy, vice president for North America for electrical cable supplier Nexans Canada Inc., on June 8. The cables of wiring are for residential applications.Fred Lum/The Globe and Mail

Copper has been called the "metal of electrification." It's crucial for electric vehicles; whereas a conventional car contains about 23 kilograms of copper, an EV has 83. It's found in wind turbines, solar-power components, geothermal technologies and virtually every other kind of renewable energy system. And it's used extensively in power cables. So our increasingly electrified world needs a lot more copper.

Jerome Leroy, vice-president of the Canadian business unit of cable supplier Nexans, worries that copper mines won't be able to keep up. This concern partly stems from the fact it takes many years to secure regulatory approvals for new mines. Moreover, ore grades at existing mines have long been in decline. (Production is concentrated in Chile, Peru and China.) Mr. Leroy points to forecasts suggesting production capacity will grow to 27 million tonnes a year by the end of this decade, whereas demand could rise as high as 35 million tonnes. A shortfall could materialize as soon as next year, he warns.

"I start to see it happening at the power utility level," he said. "People are requesting more and more cable. The likes of BC Hydro and Hydro-Québec, and others, say that probably they will need at least 5-per-cent more cable every year starting from now."

But Mr. Leroy says there's a simple solution: recycling. Nexans's Montreal plant already strips the plastic from its own scrap cable and melts the metal down in a furnace. That, combined with scrap returned by some customers, has nudged the recycled copper content of its wire to 10 per cent. Now the company has embarked on a campaign to entice customers to return more scrap cable, maintaining that by doing so customers can recover 3 per cent of their total cable costs. Nexans even encourages them to dig up decommissioned wire and send it back. If the campaign is successful, Mr. Leroy says, the company could reach 30-per-cent recycled content.

"We know that by pushing hard, we could go easily to 20 per cent," he said. "And we are making some trials with up to 30 per cent, and that still works. But the challenge is to find those scraps."

Such levels are by no means inconceivable. Unlike plastics and many other materials, copper doesn't degrade during recycling; it can be every bit as conductive and ductile as virgin material. The International Copper Study Group, a Lisbon-based organization, estimates that in recent years recycled copper has accounted for as much as one-third of global consumption.

As electricity networks expand, copper demand for power lines will double by 2040, the International Energy Agency predicted in a report published last year. Because copper (coupled with aluminum) accounts for one-fifth of the cost of expanding the grid, the implications could be significant.

Blair DeBruyne, the director of operations, inventory and fleet services at SaskPower, points out that copper is a major ingredient in transformer coils and almost every power line. But he's worried about all mined materials because order lead times are being pushed out.

"I don't think we’re zeroed in on copper, but we certainly realize how important it is to our infrastructure," he said.

As part of its recycling program, SaskPower incorporates recycling requirements into its long-term contracts with transformer and wire suppliers. Its contracts with PTI, its primary transformer supplier, contain provisions for refurbishment and repurposing. And it sends excess wire to metal recyclers in Saskatchewan and occasionally to Nexans in Montreal.

BC Hydro, another Nexans customer, also recycles extensively. In a written response to questions, spokesperson Kevin Aquino said the utility recycled more than 356,000 pounds of copper last year.

"When copper is removed from electrical infrastructure, our crews classify and sort the material to determine whether it can be reused or recycled," he wrote.

Last year, IHS Markit (a market research firm owned by S&P Global) projected that copper demand could double in little more than a decade – from 25 million tonnes today to 50 million by 2035.

"The chronic gap between worldwide copper supply and demand projected to begin in the middle of this decade will have serious consequences across the global economy," an IHS report warned, "and will affect the timing of net-zero emissions by 2050."

But such forecasts are not universally accepted. National governments seem divided on the copper market: Canada has designated copper a "critical" mineral; the United States has not. In its latest factbook, the International Copper Study Group stressed that it's "highly improbable" that the world will run out of copper.

"Since 1960, there have always been, on average, 38 years of reserves, and significantly greater amounts of known resources. … Despite increased demand for copper produced from ore in recent years, increases in reserves have grown, and there is more identified copper available to the world than at any other time in history."

In that more reassuring view, the global movement toward electric cars and cleaner energy will "support" long-term copper demand. Increased reuse and recycling is completely in keeping with how the group sees future demand being satisfied.

Nexans is doing more than simply asking customers to send more scrap: It's providing tools to facilitate that. Some of its cable spools now have GPS trackers and devices that count the spool's revolutions, so customers can estimate the length of cable left. If a spool is nearly depleted, it can be located and sent for recycling.

"In Canada, when you start spreading all of those reels throughout the country, logistics becomes a real challenge," Mr. Leroy said. "And it is our duty as a supplier to give solutions."

Nexans's greater challenge will be to convince utilities to retrieve more decommissioned copper from their networks and send it in for recycling. It's a form of urban mining – the process of recovering metals, minerals and other materials from electronic waste retrieved from cities. This is a tougher sell. Mr. Leroy acknowledges that extracting this copper requires time and investment. Moreover, older cable was insulated with oil rather than plastic, making it harder to recycle.

Mr. DeBruyne said SaskPower already removes decommissioned power lines but doubts they will become a significant source of copper.

"There isn't going to be enough reusable components, especially copper, in a lot of that stuff," he said. "There isn't enough volume out there that's going to solve Nexans's copper concerns, let's put it that way."