Billionaire Gautam Adani’s upcoming copper plant in India, set to begin operations in March 2024, is poised to significantly escalate the nation’s metal production, aiming for an 80 percent increase, as per a Bloomberg report. The Kutch Copper Ltd. facility, initially designed to handle 500,000 tons annually, is expected to fortify India’s potential in metal production.
The launch of this plant coincides with a looming scarcity in ore availability worldwide and is likely to further impact the global demand-supply situation. Closure of a major mine in Panama and substantial cuts in operations managed by Anglo American Plc are set to reduce ore availability, tightening the global supply chain upon which smelters depend, it noted.
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Notably, over 90 percent of India’s ore requirements are imported, with the majority sourced from South America.
India’s Growing Influence in the Copper Market
India’s push to expand its copper production aligns with other nations such as China, and reflects the metal’s pivotal role in the global transition from fossil fuels. However, this rapid expansion is impacting smelters’ profitability, with smelting fees in China forecasted to decrease in 2024 due to surplus capacity.
Soni Kumari, commodity strategist at ANZ Banking Group told the publication that India’s copper concentrate imports could surge to 2 million tonnes by 2024 from an estimated 1.3 million tonnes this year. This surge is anticipated due to escalating smelting capacities in China and India, indicating a tighter market by 2025.
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Adani’s plant, Jayanta Roy, senior vice president at EXECUTION Ltd told Bloomberg, could import in approximately 1 million tonnes of overseas copper concentrate in its inaugural year. Roy forecasts a potential rise in India’s total imports to 2.6 million tonnes with optimal utilisation of capacity.
Projections for Increased Demand and Capacity
Expectations loom for expanded demand as plans to double the smelter’s capacity unfold. India’s refined copper consumption is set to grow by 11 percent in the current and subsequent financial years, propelled by infrastructure investments and the nation’s gradual transition to renewable energy.
Following the closure of the Vedanta smelter in 2018, India turned into a net importer of refined metal due to a drastic reduction in local production. By March 2023 output plunged to 563,000 tonnes compared to a demand of 1.5 million tonnes, as per the International Copper Association India (ICAI).
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Kumari anticipates that Adani’s new smelter will restore India’s refined copper production to around 800,000 tonnes by 2025, echoing the figures from 2017. The surge in refined production is expected to be absorbed primarily by robust domestic demand, the report added.
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