IEA Report Highlights Urgent Need to Boost Copper Recycling for Green Transition

November 27, 2024

A new report titled “Recycling of Critical Minerals: Strategies to Scale Up Recycling and Urban Mining” has emphasized the critical role of copper recycling in meeting surging demand driven by the green energy transition. The report, published by the International Energy Agency (IEA) on November 18, warns that without significant improvements in copper recycling, the material shortage could hinder the development of renewable energy infrastructure.

To address these challenges, the IEA recommended a multi-pronged approach to boost copper recycling efforts. This strategy includes improving collection rates, mandating recycling practices, advancing sorting technologies, and investing in secondary smelters. Additionally, the agency advocated for strategic partnerships between industry stakeholders to enhance efficiency and increase the volume of recycled copper.

The report highlights that current projects will fall short of meeting 70% of projected copper demand by 2035. Although the availability of copper scrap is expected to increase until 2030, the report forecasts that it will then fall behind rising demand. Scrap volumes are projected to increase from 16 million tonnes today to 19 million tonnes by 2030 and 27 million tonnes by 2050, potentially covering only three-quarters of the anticipated demand.

Market participants at the Bureau of International Recycling (BIR) conference in October expressed concerns that the supply tightness could result in narrower scrap discounts by 2025. Fastmarkets' recent price assessments for copper scrap materials indicate steady discounts but tightening conditions as demand grows.

Historically, the copper industry has relied predominantly on primary production, with copper scrap use stagnating since 2015. However, the report suggests that a surge in end-of-life scrap after 2030 could help alleviate some supply pressures. Scrap from electric vehicles (EVs) and energy storage systems is expected to increase more than 35-fold between 2030 and 2050, pushing the share of secondary copper used to nearly 40% by 2050, up from 17% today.

China is expected to remain the largest supplier of secondary copper, accounting for approximately half of the global supply since 2015. Secondary copper production in China grew from 2 million tonnes in 2020 to 3 million tonnes in 2023, and the country remains the largest importer of copper scrap, with much of it sourced from the United States.

Beyond China, 45% of Asia's copper consumption is met by recycled material, with Japan and South Korea playing significant roles as major importers of copper scrap from both the US and Europe. Other Asian countries such as Malaysia, Thailand, Vietnam, and India have historically absorbed lower-grade scrap, but stricter import regulations have highlighted the need for increased domestic processing capacity for lower-grade copper scrap in Europe and the US.

In contrast, the European Union faces regulatory challenges as most of its scrap metal is classified as waste, which complicates exports to China. The Waste Shipment Regulation (WSR) implemented in 2024 and a new ban on exporting scrap metal categorized as waste to non-OECD countries, starting in 2027, are likely to limit global copper scrap supply if domestic smelting capacity does not expand sufficiently.

The IEA cautioned that while new regulations may benefit domestic processors in Europe, they could ultimately restrict global copper scrap availability if secondary smelting capacity does not grow swiftly enough. Europe’s increasing investment in secondary copper production could also face hurdles from high energy costs and heightened vulnerability to price volatility compared to primary smelters.

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