Gautam Adani’s forthcoming copper plant in India, scheduled to commence operations in March 2024, is poised to propel the nation’s metal production, targeting an 80% increase, according to a Bloomberg report. The Kutch Copper Ltd. facility, designed for an initial annual capacity of 500,000 tons, is anticipated to strengthen India’s position in metal production.
The plant’s launch coincides with a potential scarcity in global ore availability, impacting the worldwide demand-supply balance. The closure of a major mine in Panama and significant cutbacks in operations managed by Anglo American Plc are expected to decrease ore availability, tightening the global supply chain crucial for smelters.
India, where over 90% of ore requirements are imported, predominantly from South America, is strategically expanding its copper production, aligning with global trends. The move reflects copper’s crucial role in the global shift away from fossil fuels. However, this rapid expansion may affect smelters’ profitability, with forecasted decreases in smelting fees in China in 2024 due to surplus capacity.
Soni Kumari, a commodity strategist at ANZ Banking Group, predicts a potential surge in India’s copper concentrate imports to 2 million tonnes by 2024 from an estimated 1.3 million tonnes this year. This surge is attributed to escalating smelting capacities in China and India, indicating a tighter market by 2025.
Adani’s copper plant is expected to import around 1 million tonnes of overseas copper concentrate in its inaugural year, according to Jayanta Roy, Senior Vice President at ICRA Ltd. Roy forecasts that, with optimal capacity utilization, India’s total imports could rise to 2.6 million tonnes.
Anticipated increased demand aligns with plans to double the smelter’s capacity. India’s refined copper consumption is projected to grow by 11% in the current and subsequent financial years, driven by infrastructure investments and the nation’s gradual transition to renewable energy.
After the closure of the Vedanta smelter in 2018, India became a net importer of refined metal due to a drastic reduction in local production. Adani’s new smelter is expected to restore India’s refined copper production to around 800,000 tonnes by 2025, resembling figures from 2017. The surge in refined production is anticipated to be absorbed primarily by robust domestic demand.
This strategic move positions Adani’s copper plant as a significant player in India’s efforts to bolster metal production and meet the growing demand in the global market.
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