The Case For Copper
Pennies are outdated. The printing of pennies carries a cost to the government of around $50 million dollars a year. Many citizens lose, throw away or otherwise place little value on retaining pennies for transactions. There is even limited utility on pennies, as vending machines, toll booths, and other outlets do not accept them. It costs the government more than a penny to print a penny (about 2.72 cent cost per penny…with the Nickel being worse at over 10 cents per coin). There is an actual current debate in the United States known as “The Penny Debate” which is challenging the ongoing manufacture of pennies. What happens if we round up or down in 5 cent increments? How would that affect the consumer? Barley to the postive. In fact, with the elimination of pennies, prices would not be higher — Research by Whaples, using data on nearly 200,000 transactions from a multi-state convenience store chain shows that rounding would have virtually no effect. Consumers would gain a tiny amount — about 1⁄40¢ per transaction.
Each penny is 2.5% copper and 97.5% zinc. As global demand for copper is rising, it might be another reason to add to the bucket of ditching penny production. A copper super-cycle is underway. S&P Global, a consultancy, expects copper consumption to double to 50 million tons between now and 2035. In fact, supply is unlikely to keep up. To complicate matters, in both Chile and Peru, which together produce nearly 40% of the world’s copper, mining is vulnerable to national politics. If one or both countries suffers a political misalignment, it could put pressure on inhibiting extraction and supply.
Copper was mankind’s first metal to be worked on. Over 11,000 years ago, people crafted it into jewelry and ornaments. Today, we consume over 20 million tons annually, primarily in construction and electrical infrastructure. Future demand will surge due to widespread electrification driven by transitioning to greener economies. Copper is a critical part of batteries, motors and charging equipment. Solar and wind installations use more copper than their fossil-fuel counterparts, and electric vehicles contain four times more copper than do cars with combustion engines. Global demand for copper is increasing at a massive rate and expected to continue to grow in lockstep with the growth of the aforementioned emerging product trends — EV’s and solar panels.
The global push towards electric vehicles has led to a surge in demand for copper. The EV’s greater use of more copper compared to traditional internal combustion engine vehicles is primarily in the wiring and motors. The shift towards renewable energy sources like wind and solar power involves a substantial increase in the use of copper for cables, inverters, and transformers. A single residential solar panel can contain about 3 pounds of copper.
The price of copper has seen a steady increase over the years. As demand continues to outstrip supply, prices should continue to rise. The rise in commodity prices isn’t always a long term bullish scenario. Often times high prices warrants the need to develop alternative resources or methods which circumvents or otherwise eliminates the need for a particular commodity. With copper mining, effort to extract and generate more supply is the likely direction of the future. In fact, there was an article in Open Science magizine which noted there a significanct amount of copper to extract on the ocean floor….and…you’ll never guess…also in active and dormant volcanoes (for example there is 1.4m tons of copper beneath New Zealand’s White Island volcano).
This evidence comes from electromagnetic surveys carried out on some 40 volcanoes, including Mount Fuji in Japan, Mount St Helens in America and others in Bolivia, New Zealand, the Philippines and elsewhere. These surveys consistently pick up highly conductive zones 2km or more beneath the surface, for which the simplest explanation is the presence of super-salty metal-rich brines. This conjecture is reinforced by analysis of rock samples recovered from such depths under a number of volcanoes. These do indeed contain brines with varying concentrations of copper, as well as other valuable metals including lithium, zinc, gold and silver. (source: The Economist, “People may one day drill for copper as they now drill for oil” — July 7th, 2021)
In the US, Arizona became a hub for copper mining due to its large mineral resources. Mines such as the Copper Queen in Bisbee and the Morenci Mine played big roles in the state’s economy and development. Copper mining operations in Arizona and other states employed thousands of workers and contribute to the industrial growth of the nation. Today, the United States remains a large producer of copper, with modern mining operations employing advanced technology to extract and process the metal efficiently and responsibly. The industry continues to evolve, adapting to global market dynamics. But believe it or not, copper is not abundant like other metals such as aluminum (Which is found in 1.6% of the Earth’s crust). Only a handful of US states are copper producing.
Copper is one of the most widely used metals due to its excellent conductivity, malleability, and resistance to corrosion, making it indispensable in various applications such as electronics, construction, and transportation The largest producers of copper globally include countries such as Chile, China, Peru, the United States, and Australia. Chile consistently ranks as the top producer, accounting for a significant portion of the world’s copper supply.
China, as the world’s largest consumer of copper. The country’s demand for copper is driven by its rapid industrialization, infrastructure development, and electronics manufacturing sectors. As a result, China not only consumes a large portion of the world’s copper but also imports significant quantities to meet its domestic demand.
Global copper production is influenced by factors such as technological advancements in mining methods, geopolitical developments affecting mining policies and investments, and fluctuations in global demand and prices. The industry continues to evolve, with sustainability and environmental considerations increasingly shaping mining practices and regulations worldwide.
With copper prices expected to continue rising, don’t go melting your extra pennies down for cash…you shouldn’t anyways…it’s illegal.
