Copper|Energy|Financial|Infrastructure|Renewable Energy|Service|Infrastructure|Operations
Copper|Energy|Financial|Infrastructure|Renewable Energy|Service|Infrastructure|Operations

Billionaire Adani’s new copper foray to further tighten world's ore supply

14th December 2023

By: Bloomberg


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The planned start of billionaire Gautam Adani’s copper plant in India next year will spur a sharp rise in imports of concentrate, further tightening the global supply of ore on which smelters rely.

The Kutch Copper facility, with initial capacity of 500 000 t/y, is slated to come online in March, boosting the country’s potential production of the metal by 80%. Its launch will coincide with a dramatic drop in the availability of ore after the closure of a major mine in Panama and drastic cuts at operations owned by Anglo American.

India joins China and other nations in rapidly expanding its ability to produce copper, a metal deemed crucial to the world’s transition away from fossil fuels. The breakneck growth is affecting profitability: the annual fees charged by smelters in China will drop for the first time in three years in 2024 as their capacity outpaces the supply of ore.

India’s imports of copper concentrate could grow to as much as two-million tons in 2024, from 1.3-million tons estimated for this year, said Soni Kumari, commodity strategist at ANZ Banking Group. The market will be even tighter in 2025 “because of expanding smelting capacity in China and India,” she said.

India imports more than 90% of its ore requirements, mostly from South America. Adani’s expansion comes with legal proceedings also underway to reopen a long-shuttered 400 000-ton plant in Tamil Nadu run by Vedanta. The country’s biggest copper smelter is currently operated by Hindalco Industries Ltd., which also has capacity of 500 000 t.

The Adani smelter could suck in as much as one-million tons of overseas copper concentrate in its first year of operation, said Jayanta Roy, senior vice president at ICRA, an arm of Moody’s Investors Service. India’s total imports could rise to 2.6-million tons assuming peak capacity utilization, he said.

And demand is expected to grow further given the intention to ultimately double the new smelter’s capacity. In both this financial year and next, which end in March, India’s refined copper consumption is expected to grow at a very healthy 11%, driven by the government’s spending on infrastructure and the country’s gradual transition to renewable energy, according to ICRA.

The shuttering of the Vedanta smelter in 2018 reduced ore inflows sharply, turning India into a net importer of the refined metal after local production slumped by almost half. The shortfall has persisted. In the year to March 2023, output was just 563 000 t versus demand of 1.5-million tons, according to the International Copper Association India.

Adani’s new smelter should return the nation’s refined copper production to 2017 levels of about 800 000 t by 2025, ANZ’s Kumari said. “We expect the increasing refined production will be largely absorbed by strong domestic demand,” she added.

Edited by Bloomberg



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