LONDON （Dow Jones）--Around 400,000 metric tons of copper is lost each year to alternative substitutes, a drop in the ocean compared with the overall market and likely to remain limited going forward, according to a senior executive at the world's biggest cable maker.
Substitution started to take off in 2006 when the price of copper began to move higher, Julien Catel, head of metal risk management at Nexans （NEX.FR）, told Dow Jones Newswires during a recent interview in London during the annual London Metal Exchange industry week.
"We have seen some substitution efforts as some of our clients were studying alternative technical solutions. But it has never been massive," Catel said.
Of the 400,000 tons a year lost to substitution, the cable industry accounts for something close to 130,000 tons, he noted, half of which is related to the telecom cable industry where fiber is substituted to copper in what is a technology-related, not price-driven, move.
Substitution has been limited to business segments such as low voltage power distribution, in power networks running from transformers to buildings, and only in some countries. Catel said this is because copper is the best electrical conductor aside from silver, making substitution far from easy.
"Basically, you need roughly twice as much aluminum as copper to convey the same electric charge. This obviously reduces the price difference by half. In addition, it means the conductor is bigger, so that you need more other raw materials to insulate and sheath it, which reduces further the price difference," he said.
"All in all, it makes the cables bigger, heavier and with lower bending ability, both raising several technical issues in many of our business segments, be it building wires or industry cables," he added.
As for power networks, bigger cables also mean that connections will be more complex and difficult to implement, and will also be a technical issue and source of higher cost.
"If your power-grid is exclusively made of copper cables, you would think twice before starting to replace some junctions with aluminum cables," Catel said.
According to Catel, substitution ultimately remains limited because copper is either a necessity or a rather small portion of the end-product manufacturing cost.
"In the car industry, for instance, where an executive model would typically contain 3 kilometers to 5 kms of cables, reducing their contribution to the weight of the car may be more relevant an issue （to performance and energy efficiency） than reducing their contribution to the costs.
Nexans is one of the few fully integrated cable makers, and also owns copper rodmills for which it buys cathodes. In terms of net consumption, it processed just below 500,000 tons of copper in 2009, and around 100,000 tons of aluminum.
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