[Courtesy of SKC]
According to data released by London Metal Exchange (LME), the price of copper reached $8,263 per ton on May 15. Global investment management firm Goldman Sachs predicted that the price of copper will reach $10,500 in 2023 and spike to $15,000 in the long term. The price increase of copper is due to the expanded distribution of EVs. An ordinary EV requires up to 400 percent more cooper than an ordinary combustion engine vehicle.
While the demand for copper is high in the market, supply is limited. LME's data shows that the copper inventory is decreasing fast. There were 137,107 tons of copper in October 2022 and the volume reduced to 76,625 tons on May 12. Global management consulting company McKinsey & Company predicted that the annual demand for copper will reach 36.6 million tons in 2031 while the supply will stand at 30.1 million tons.
Currently, South Korean steel maker POSCO and battery maker LG Chem manage their own lithium supply lines that cover the mining, refining, processing, and product manufacturing of lithium. POSCO Holdings, the holdings company of POSCO, invested more than 3.5 trillion won ($26.2 billion) in its lithium business including the development of a saltwater lithium factory and plants for lithium hydroxides and lithium carbonates in Argentina.
LG Chem invested 100 billion won into Piedmont Lithium, an American mining company, to provide lithium mined from American soil to North American battery electrode makers. It is important for battery makers to use materials created on American soil to be selected by EV makers who seek to receive a full tax benefit for their cars. EVs and other clean energy vehicles are unable to receive tax credits of up to $7,500 if less than 50 percent of battery parts are made outside the U.S. soil.
While South Korean companies focus on acquiring stable lithium supply lines, almost every company relies on the global metal exchange for copper. South Korean conglomerate SK Group had shown interest in a copper mine in Zambia, but the company is not taking any action at the moment.
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