For over a very long period India was a net exporter of copper. Yet in FY19, it turned into a net importer. With new domestic capacity scheduled to begin operations, India’s copper imports are expected to decline. But at the same time, demand is expected to also grow at a brisk pace with the ongoing transformation to renewable energy.
India transitioned from being a net exporter in 2017–18 to a net importer in FY19, and has remained on the same trajectory ever since. In FY18, copper import was only 0.044 MT, while exports stood at 0.379 MT. During FY ’23 copper imports and exports were recorded as 0.18 MT and 0.03 MT, respectively. Due to increasing demand and a shortage in supply, copper imports have soared 184% YoY to 0.22 MT in H1, FY’24, as compared to H1FY23.
Government data shows that India’s consumption of refined copper has scaled up drastically from 0.43 MT in FY18 to 0.7 MT in FY23. Conversely, the production plummeted from 0.77 MT in FY18 to 0.55 MT in FY23. The Government of India’s emphasis on infrastructure development and the gradual transition towards renewable energy could further push the domestic refined copper demand growth to about 11% in FY2024 and FY2025, exceeding the rate of global growth in demand for copper.
As reported by rating agency ICRA, the infrastructure and construction industries use about 40% of copper. On the other hand, the automobile and consumer durables sectors consume about 11-13% of copper each.
For over a very long period India was a net exporter of copper, but that changed in May 2018 when Sterlite’s 0.4 million tonnes per annum (MTPA) copper smelter at Thoothukudi in Tamil Nadu closed. The case of Sterlite’s TN unit is still before the Supreme Court.
According to Miren Lodha, Director-Research at Crisil Market Intelligence and Analytics, “Before the closure of concentrate treatment facility in May 2019, India used to export 40-45% of domestic copper cathode. However, currently, copper cathode exports are 2% of domestic production.”
He further stated that the government’s green initiatives, the electrification of rural areas, and the increasing use of electric vehicles all contributed to the 5% CAR increase in domestic demand through that period, which reached 1200 ktpa. Considering the emphasis on renewable energy capacity, Lodha noted that going forward the domestic demand is anticipated to grow at an accelerated rate of 8%.
Current status of upcoming domestic copper capacity
India may experience a decrease in copper imports in the coming years, following a period of consistent growth, as new domestic capacity is set to become operational.
Adani Group’s greenfield copper facility near Mudra Port, with a capacity of 0.5 million tonnes per annum (MTPA), is expected to begin operations in the first half of 2024. Most of the construction work at the site has already been finished, and the company is in the advanced stages of long-term tie-ups with suppliers of copper concentrate, according to an October 2023-India Rating and Research note.
The Adani group company Kutch Copper Ltd. (KCL) has been granted the environmental clearance and consent needed to set up the facility and further regulatory approvals will be secured eventually.
Similar capacity will be added by KCL in the second phase. For its superior electrical conductivity, copper is their preferred metal for a wide range of de-carbonization technologies with the collective potential to reduce worldwide greenhouse gas (GHG) emissions by two-third.
India is progressing rapidly towards achieving its target of having a 30% market share in electric vehicles, by 2030. In order to meet at least half of its energy needs from renewable sources, the country also plans to develop a 500 GW non-fossil fuel energy capacity by 2030.
The proposed transition will be focused on minerals, especially copper. In view of this development, the demand for copper metal is expected to climb up further. According to Goldman Sachs, the copper content of a standard electric vehicle (EV) is approximately four times more than that of an internal combustion engine (ICE).
According to estimates from the International Copper Alliance, on average, renewable power generators use 8 to 12 times more copper than traditional generators.
Notably, India’s long-term plan for low-carbon development focuses on seven crucial transitions: Building an integrated, effective, and equitable transportation system and creating low-carbon electrical systems are at the top of the list.
The country’s carbon intensity is expected to increase as it advances toward being a developed nation by 2047, even while its per capita carbon emissions are barely one-third of the worldwide average.
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