India's drive towards clean energy systems, increasing penetration of electric vehicles and a host of associated applications are expected to double the domestic copper demand by 2030
Billionaire Gautam Adani-led group is building the world's largest single-location copper manufacturing plant at Mundra in Gujarat, which will help cut India's dependence on imports and aid energy transition.
The USD 1.2 billion facility will start operations of the first phase by March-end and full-scale 1 million metric tonnes capacity by FY29 (March 2029), Kutch Copper Ltd. Managing Director Vinay Prakash said.
India joins China and other nations that are rapidly expanding production of copper, a metal crucial for transitioning away from fossil fuels. Technologies critical to the energy transition, like electric vehicles (EVs), charging infrastructure, solar photovoltaics (PV), wind, and batteries, all require copper.
Kutch Copper Ltd. (KCL), a subsidiary of the group's flagship Adani Enterprises Ltd. (AEL), is setting up a greenfield copper refinery project for the production of refined copper with a 1 million metric tonnes per year capacity in two phases.
For Phase 1, with a capacity of 0.5 million metric tonnes per year, KCL achieved financial closure through a syndicated club loan in June 2022.
"Adani wants to become a global leader in the copper business, leveraging the Adani Group's strong position in resource trading, logistics, renewable power, and infrastructure," Prakash said. "Their aim is to be the world's largest copper smelting complex by 2030."
He said India's per capita copper consumption is estimated at around 0.6 kg, compared to the global average of 3.2 kg.
"India's drive towards clean energy systems, increasing penetration of electric vehicles, and a host of associated applications are expected to double the domestic copper demand by 2030."
"The Adani Group is investing heavily in the energy transition, in which copper will play a vital role. It is expanding into adjacent areas of its current capabilities, which makes the copper business a strategic fit," he said.
Copper is the third most used industrial metal after steel and aluminium, and its demand is rising on the back of the fast-growing renewable energy, telecom, and electric vehicle industries.
India's copper production has been unable to meet this demand, and domestic supply disruptions have led to a higher dependency on imported copper.
India's imports have been consistently on the rise for the past five years.
For FY23 (April 2022 to March 2023 fiscal), India imported a record 1,81,000 metric tonnes of copper, while exports plummeted to a record low of 30,000 metric tonnes, even lower than the COVID pandemic period, according to the data from the government.
The country is estimated to have consumed 7,50,000 metric tonnes of copper in FY23 (612 KT in FY22). The number is expected to rise to 1.7 million metric tonnes by 2027 on the back of huge demand from the green energy industry.
Global demand for copper from solar photovoltaic (PV) installations alone is estimated to double to 2.25 million metric tonnes in the current decade.
Adani Group, which is rapidly growing its renewable portfolio, will be a significant consumer of the red metal.
Prakash said Adani Group's foray into copper manufacturing is a natural extension of its trading, mining, logistics, infrastructure, and manufacturing businesses. "We have a strong international presence to import copper concentrate, as India does not produce enough."
The West Coast, he said, provides Adani with an additional competitive advantage to cater seamlessly to domestic as well as international markets.
Kutch Copper will produce copper cathodes and rods, as well as valuable byproducts such as gold, silver, selenium, and platinum.
Additionally, the integrated complex will produce sulfuric acid, which is a key raw material for manufacturing phosphatic fertilisers, detergents, pharmaceuticals, specialty chemicals, paper and sugar bleaching, and water treatment. India imports roughly two million metric tonnes of sulfuric acid.
The plant will produce 500,000 metric tonnes of refined copper per year in Phase I with by-products of nearly 25 metric tonnes of gold, 250 metric tonnes of silver, 1.5 million metric tonnes of sulfuric acid, and 250,000 metric tonnes of phosphoric acid. The Phase II expansion will increase the refined copper capacity up to 1 million metric tonnes per year, sources said.
"The copper complex construction (Phase I) is in the advanced stages, and the plant is expected to be operational in 2024," Prakash said.
Adani's copper plant comes at a time when Vedanta Ltd. is seeking to reopen a long-shuttered 400,000-tonne plant at Tuticorin in Tamil Nadu. The country's biggest copper smelter is currently operated by Hindalco Industries Ltd., which also has a capacity of 0.5 million metric tonnes.
"Its waste-to-value strategy envisages tapping into adjacencies and creating markets for copper slag in road construction, cement, and other applications," Prakash said.
On the impact of the plant on global prices of copper concentrate, sources said more copper concentrate assets would become operational in the future as a result of India's new exploration and auction policy. Also, upcoming mining projects across the globe are likely to boost the supply of copper concentrate in the medium term, leading to a demand-supply balance.
"Kutch Copper will be one of the most efficient copper smelters in India, with lower greenhouse gas emissions. Adani is striving to increase the share of renewables in the overall energy mix in our quest to be a proponent of 'green copper'," Prakash said.
On the operational front, the company is engaged in long-term supply agreements for the key raw material, copper concentrate. This, along with its strategic location and integrated value chain advantage, will help Kutch Copper become one of the most sustainable and lowest-cost copper producers in the world.
Keeping in mind the group's ESG priorities, the plant's sustainable solution-based project design will have zero liquid discharge. It will explore using green power and deploying by-products for cement and other businesses.
Globally, copper production is more concentrated than oil. The two top producers, Chile and Peru, account for 38 percent of world production.