The upcoming launch of billionaire Gautam Adani’s copper plant, Kutch Copper Ltd., in India next year is poised to significantly boost imports of concentrate, intensifying the global scarcity of ore crucial for smelters. With an initial capacity of 500,000 tons annually, the facility is scheduled to commence operations in March, potentially elevating India’s metal production by 80%. This development coincides with reduced ore availability following the closure of a major mine in Panama and substantial cutbacks at operations owned by Anglo American Plc.
As part of a global trend, India, along with China and other nations, is rapidly expanding its copper production capacity, a critical component in the world’s shift away from fossil fuels. This surge in growth is impacting smelter profitability, with smelters in China anticipating a drop in annual fees for the first time in three years in 2024, as their capacity surpasses the ore supply.
Projections suggest that India’s copper concentrate imports could surge to approximately 2 million tons in 2024, up from an estimated 1.3 million tons this year. According to Soni Kumari, a commodity strategist at ANZ Banking Group, the market is expected to become even tighter in 2025 due to expanding smelting capacity in China and India.
India, heavily reliant on imports for more than 90% of its ore needs, mostly from South America, is witnessing Adani’s expansion alongside legal proceedings to reopen Vedanta Ltd.’s long-shuttered 400,000-ton plant in Tamil Nadu. Hindalco Industries Ltd. currently operates the country’s largest copper smelter, with a capacity of 500,000 tons.
Jayanta Roy, Senior Vice President at ICRA Ltd., anticipates that Adani’s smelter could potentially import up to 1 million tons of overseas copper concentrate in its inaugural year, contributing to India’s total imports reaching 2.6 million tons at peak capacity utilization. The growing demand is expected to continue, with plans to eventually double the new smelter’s capacity.
Despite the shuttering of the Vedanta smelter in 2018 leading to a sharp reduction in ore inflows, turning India into a net importer of refined metal, Adani’s new smelter is projected to restore the nation’s refined copper production to around 800,000 tons by 2025. This increase is anticipated to be absorbed by robust domestic demand driven by government spending on infrastructure and the country’s gradual transition to renewable energy, according to ANZ’s Kumari.
