Global search for hidden copper

A stronger circular economy for copper could significantly reduce emissions – but first, the industry must collect the copper scrap that is not currently being collected. In the following article, the authors of the McKinsey Energy and Materials practice group summarise the state of global scrap recycling and its role in decarbonisation based on their latest study.

Across the copper value chain, companies are setting ambitious targets to reach carbon neutrality in the next decade. This push for decarbonization coincides with increasing demand for copper—driven by the metal’s significance in future-facing applications such as batteries, renewable energy, and electricity transmission and distribution—as well as restricted supply. In fact, the world is expected to face a refined-copper shortfall of about 3.6 million metric tons (Mt) by 2035, according to McKinsey analysis.
Copper recycling could be the key to solving the supply challenge. Increasing the capture of secondary copper (that is, postconsumer copper scrap such as e-waste) would open new supply sources and eliminate emissions from producing primary copper. This should go hand in hand with a further build-out of secondary-copper smelting capacity. It could also enable a more secure copper supply in the future. All in all, developing circular value chains for copper will take a strong push from producers to secure and increase secondary-copper volumes and a strong pull from OEMs and end consumers who value recycling and decarbonization.
To access the growing (and partly uncollected) scrap pool, copper producers should consider partnerships and investments in the copper scrap collection and processing value chain. As these secondary-copper value chains develop, there will likely be greater competition to secure postconsumer scrap volumes, making it critical to be more proactive.

Challenges to increase copper scrap volumes

The copper value chain relies on two types of inputs: copper ore from mines (that is, primary copper) and scrap. Preconsumer scrap is recovered from the manufacturing process, and postconsumer scrap is recovered from products at end of life. Both ore and scrap can be refined to make copper that is usable in other products. Because refined copper is a commodity, it is less differentiated than the wide variety of plastics, glass types, or even steel types. Recycling copper scrap is thus in some ways simpler than recycling other materials. However, companies looking to introduce new circular supply and decarbonize refined copper supply chains face three main challenges:

1. Limited scrap supply. Approximately 60 percent of postconsumer copper scrap will enter the formal recycling value chain globally in 2035; the remainder is either lost, collected informally, or uncollected (for example, if it is possible to recover but difficult to access). Accounting for processing losses, the share of formally recycled and reused copper units further reduces to about 45 percent of the total copper content of postconsumer scrap.
2. Mixed end products. Copper is often only a partial component in a given end product, meaning it needs to be extracted or separated from anything that has been recycled. Impurities in collected copper mean that scrap volumes may need to be re-refined or downcycled.
3. Sourcing. It is difficult to track the provenance of copper scrap across geographies and end sectors. These challenges vary by region but generally hold true across the global copper industry. The first step in improving circularity and reducing mine-based emissions is to raise awareness of the full copper value chain so that stakeholders can take informed action.

Establishing these ecosystems could increase the collection and recovery of copper scrap volumes, allowing companies—and the planet—to reduce waste and make the most of what’s already out there. Being at the forefront of creating these circular supply chains could allow players to get advantageous access to scrap pools and reduce the expected future copper supply gap. In the hunt for this lost copper, acting soon and strategically will be key.
Source: McKinsey