Copper seems to be the new lithium, as per metal markets. Worries that there won't be enough of the red metal for the energy transition have increased as a result of a dearth of new mining activity, a hot topic at this week's World Copper Conference in Santiago, Chile.

Chile is considered the greatest producer of copper, in addition to South America, which as a whole dominates global output, a new report by the Wall Street Journal highlights.

Growing mine output has proven difficult, leading to a wave of industry mergers and acquisitions and dire supply shortage predictions for the coming ten years, the report adds.

Electric vehicles, solar panels, and other environmentally friendly technology all make use of copper in wiring and construction. According to consultancy firm McKinsey & Co., electrification is anticipated to boost annual copper demand to 36.6 million metric tons by 2031, with supply predicted to be around 30.1 million tons, resulting in a 6.5 million ton gap at the beginning of the next decade. 

The International Copper Study Group estimates that the global demand for refined copper in 2021 will be 25.3 million tons.

“The market overall is pretty tight,” Robert Edwards, a copper analyst at CRU said as quoted by The Wall Street Journal. "Longer term there’s a narrative around resource scarcity and the green transition with EVs and renewables as well as the build-out of electricity grids. On paper it’s quite a substantial supply gap opening up over the next 10 years," he added. 

But, "there’s no slack in the system, no buffer," Marex’s head of market analytics Guy Wolf said at a recent conference in Switzerland.

He added that the only metal with guaranteed demand growth was copper, but stressed that prices would need to increase to $15,000 per metric ton in order to entice investment in new mines. A ton of futures on the London Metal Exchange currently costs about $9,000.

A recent round of deals has been centered around copper miners. Recently, Glencore PLC made a $23 billion acquisition bid for Canadian miner Teck Resources Ltd., which might result in the formation of the third-largest copper producer in the world. Teck declined the proposal. On Monday, a $6.34 billion acquisition of OZ Minerals Ltd. by BHP Group Ltd. also received court permission.

The biggest difficulty, according to analysts, is a lack of newly obtained resources. According to the International Copper Study Group, global mining output reached 21.8 million tons in 2022, an increase of just 1 million tons over the preceding three years. 

Analysts anticipate modest output growth in Chile and Peru. Due to factors ranging from worker safety to increased governmental control over mining assets, mines are currently operating with reduced employee levels and halted operations after local objections from community groups. 5.7 million tons of copper are expected to be mined in Chile in 2023, according to research firm Fitch Solutions, which is the same amount as in 2020. 

The rich copper seams in the central African nations of Zambia and the Congo could provide new sources of supply, the report argued. They are currently being exploited.

The biggest deposits are still found in South America. It is worth noting that 2.3 million metric tons of copper metal were exported from Congo in 2022, up from 1.8 million metric tons in 2021, which is less than half of Chile's output.

See more: Biggest copper producers in the world