For the domestic market, most of it comes from scrap metal. The U.S. has only three remaining smelters, with only two that are operational today, one of which is idle at the moment. For historical context, in earlier, less concentrated periods like the 1990s, the U.S. had over 16 major smelters across nine states. Like aluminum, smelting and processing of mined rock has become a China business. In a worse case scenario, this threatens U.S. access to copper.
“Chinese smelters are willing to operate at a loss because they have ancillary sources of revenue,” said Daniel Yergin, Vice Chairman of S&P Global [Testimony]. China also has the latest and greatest smelters. “They’re modernized and have the most advanced technologies for smelting. It’s quite dramatic how quickly they have come to dominate smelting. And I think in terms of the U.S. the question is can we build, in an expeditious way, new processing facilities here to compete with that?”
He couldn’t answer that question. Nor could anyone on the Committee.
Debra Phillips, President & CEO of the National Electrical Manufacturers Association [Testimony] said competing with the world for copper was slowing down the much-needed expansion of the energy grid.
“We’ve got unprecedented growth in electricity demand, and we see it as far out as 2050. So these supply chains that are serving the grid are strained,” she told the Committee. “We’re constrained by materials, copper included, as well as electrical steel. So these issues matter.”
She said her Association’s members source domestically, as well as from Chile, Peru, Mexico and Canada. Still, she was an advocate for reshoring copper “across the entire copper supply chain,” saying it would help companies that build equipment for the electrical grid have the confidence needed to meet demand – or risk being beaten by imports, likely from Asia.
Rep. Seth Magaziner (D-RI-2) asked about increasing the supply of recycled copper. “My understanding is that recycled copper currently counts for about a third of U.S. supply. What do we need to do, or what can be done to increase our recycling capacity for copper, so that we can, at least in part, meet more of our demand that way?”
One witness fell short of calling for export restrictions. China is a big buyer of U.S. scrap.
“Recycling capacity is critically important,” said Adam Estelle, President of the Copper Development Association [Testimony]. “We also have to remember the significant lag time before the copper becomes available for recycling. Meanwhile, demand has increased almost exponentially.”
Ranking Member Yassamin Ansari (D-AZ-3) lauded the recycling program and wanted more of it. If Estelle fell short of calling on export restrictions, Ansari filled the gap.
“We need a robust recycling program with more domestic capacity to process that recycled copper so it gets reused here at home instead of shipped overseas,” she said. “Recovering copper from retired equipment, buildings and electronics, is often faster, cheaper, and cleaner than starting from scratch.”
House Committee Hears Testimony Recommending Copper Get Special Tax Treatment, Consider Scrap Export Restrictions
A House Natural Resources subcommittee heard from witnesses last week calling for special tax breaks and for Congress to consider restrictions on copper scraps exports.
Witnesses at an Energy and Mineral Resources Subcommittee hearing on April 26 recommended that copper – now listed as a critical mineral by the U.S. Geological Survey and the Department of the Interior as of November – be treated with more economic urgency.
“We need to take decisive action to cut through the red tape and years of policies that were developed to hinder mining. Our national security and economic well-being depend on a reliable, affordable supply of copper,” said Chairman Peter Stauber (R-MN-8) in his opening remarks. “We must do more to develop domestic supply chains and ensure that our country has the copper it needs,” he said.
Copper has become one of America’s premier metals. AI data centers and EVs are the main driver.
The increase in copper demand is due to copper’s role as the metal of electrification. Global electricity demand is expected to grow by almost 50% in the next 14 years, according to S&P Global. Electric power utilities that had flat demand in the U.S. are now looking at roughly 5% growth per year. EVs require 2.9 times more copper than a conventional car. Solar also requires a lot of copper. The military defense industry is another demand vector that is leading to concerns over a 10 million ton shortfall over the next decade.
The copper industry directly employs 65,000 people, with over $31 billion in annual wages and benefits.
S&P Global’s report titled “Copper in the Age of A.I.” said copper was living its best moment, probably since the industrial revolution. They project a demand surge from 28 million metric tons in 2025 to 42 million metric tons by 2040.
Where American Companies Source Copper
For the domestic market, most of it comes from scrap metal. The U.S. has only three remaining smelters, with only two that are operational today, one of which is idle at the moment. For historical context, in earlier, less concentrated periods like the 1990s, the U.S. had over 16 major smelters across nine states. Like aluminum, smelting and processing of mined rock has become a China business. In a worse case scenario, this threatens U.S. access to copper.
“Chinese smelters are willing to operate at a loss because they have ancillary sources of revenue,” said Daniel Yergin, Vice Chairman of S&P Global [Testimony]. China also has the latest and greatest smelters. “They’re modernized and have the most advanced technologies for smelting. It’s quite dramatic how quickly they have come to dominate smelting. And I think in terms of the U.S. the question is can we build, in an expeditious way, new processing facilities here to compete with that?”
He couldn’t answer that question. Nor could anyone on the Committee.
Debra Phillips, President & CEO of the National Electrical Manufacturers Association [Testimony] said competing with the world for copper was slowing down the much-needed expansion of the energy grid.
“We’ve got unprecedented growth in electricity demand, and we see it as far out as 2050. So these supply chains that are serving the grid are strained,” she told the Committee. “We’re constrained by materials, copper included, as well as electrical steel. So these issues matter.”
She said her Association’s members source domestically, as well as from Chile, Peru, Mexico and Canada. Still, she was an advocate for reshoring copper “across the entire copper supply chain,” saying it would help companies that build equipment for the electrical grid have the confidence needed to meet demand – or risk being beaten by imports, likely from Asia.
Rep. Seth Magaziner (D-RI-2) asked about increasing the supply of recycled copper. “My understanding is that recycled copper currently counts for about a third of U.S. supply. What do we need to do, or what can be done to increase our recycling capacity for copper, so that we can, at least in part, meet more of our demand that way?”
One witness fell short of calling for export restrictions. China is a big buyer of U.S. scrap.
“Recycling capacity is critically important,” said Adam Estelle, President of the Copper Development Association [Testimony]. “We also have to remember the significant lag time before the copper becomes available for recycling. Meanwhile, demand has increased almost exponentially.”
Ranking Member Yassamin Ansari (D-AZ-3) lauded the recycling program and wanted more of it. If Estelle fell short of calling on export restrictions, Ansari filled the gap.
“We need a robust recycling program with more domestic capacity to process that recycled copper so it gets reused here at home instead of shipped overseas,” she said. “Recovering copper from retired equipment, buildings and electronics, is often faster, cheaper, and cleaner than starting from scratch.”
One Solution on Offer: Bring Copper Into the 45X Tax Credit
Most of the solutions to meeting demand without having to rely on Asia, led by China, were to include copper in a 45X tax credit program. This requires an act of Congress via legislation. Copper is now a critical mineral, but the definition of “applicable critical minerals” under 45X comes from the Internal Revenue Code (Section 45X(c)(6)).
Estelle put 45X before Congress.
“I think that’s the principal financial tool we have to make expanded smelting and refining capacity economically viable in this country,” he said.
“That tax credit would help not only primary refining, but also secondary (scrap copper) refining as well,” Estelle said. “And on top of that, we need the permitting reform, we need the regulatory certainty, the sustained financial support, and we need the workforce, so we’ve got a multi-faceted challenge here, but we absolutely have to prioritize processing in this country, because we can open these mines, but if we can’t process it here economically then we’ll have to export it for processing,” he said.
Congress knows about the need for 45X for copper.
Last month, Rep. David Schweikert (R-AZ-1) filed H.R. 8277, a bill to amend the Internal Revenue Code and designate copper 45X eligible. It would also include ore extraction costs in the credit to bolster domestic mining.
“Even if we mine and refine more copper in the United States, we will not have a secure supply chain without domestic manufacturing capacity,” said Ansari. “In a resource-constrained environment, we should prioritize copper uses that strengthen the electrical power grid, modernizes infrastructure, and helps us more quickly deploy clean energy,” she said. Ansari supports industrial policies like the Inflation Reduction Act, which used the 45X for solar manufacturers, for example. “Strategic minerals should support our strategic, economic priorities,” she said.
MADE IN AMERICA.
CPA is the leading national, bipartisan organization exclusively representing domestic producers and workers across many industries and sectors of the U.S. economy.
TRENDING
CPA Applauds Executive Order Strengthening Customs Enforcement, Cracking Down on Non-Resident Importers and Weak Bonding
Mike Froman Is Wrong Again: Manufacturing Jobs Are Among America’s Best Jobs
EU Moves To Protect Antibiotics From Asian Dominance; Aligning More With U.S.
Senate Small Business Hearing Suggests Some Tariff Wariness
Stop Trading Away Industries. Stop Trusting Paper Origins. The USMCA Review Stakes.
The latest CPA news and updates, delivered every Friday.
WATCH: WORTH FIGHTING FOR
Get the latest in CPA news, industry analysis, opinion, and updates from Team CPA.
CHECK OUT THE NEWSROOM ➔