Posted on 30 Jul 2024
India's copper cathodes imports ride infra boom, surge 133% in FY'24
- Chile plays expanded role in India's copper imports
- Domestic production falls on limited refining capacity
- Consumption rises 24%, govt encouraging exploration
Morning Brief: India's semi-finished copper (cathodes) imports surged 133% in financial year 2023-24 (FY'24), as per data collated by BigMint. Volumes in financial year 2023-34 (FY'24) touched 325,500 tonnes (t) compared to 139,500 t seen in FY'23. This remarkable growth highlights the rising demand for and reliance on copper cathodes in the country.
Along with cathodes, imports of copper scrap, a raw material, into India saw a 13% increase last fiscal to over 300,000 t from 270,000 t seen in FY'23.
Country-wise break-up
In FY'24, there were notable changes in volumes from key supplier countries of cathodes to India. Exports from Japan increased significantly by 86%, to 220,000 t in FY24 from 118,000 t in FY23. Zambia, however, saw a 16.5% decrease to 200,000 t (239,000 t). In contrast, exports from the Democratic Republic of the Congo surged by an impressive 289% to 71,442 t (18,355 t) albeit on a lower base.
Meanwhile, Chile entered the market with semi-finish exports totalling 30,127 t in FY'24, reflecting its expanding role as a supplier to India's copper industry, riding its vast reserves of the mineral, which are among the largest in the world. The country accounts for about 28% of the total global copper production.
Furthermore, India's preferential trade agreements (PTA) with Chile has facilitated the entry of its copper products at reduced tariffs, making these more competitive and attractive to Indian buyers.
Factors that impacted cathodes imports
- Semi-finished copper production declines: Last fiscal, India's semi-finished copper production experienced an 8% decline y-o-y with volumes falling to 510,000 t from 553,600 t in FY'23, which encouraged cathode imports. India's refining capacity for copper has become limited, with Vedanta's copper plant not functional. The closure of the Sterlite copper smelter in Thoothukudi, Tamil Nadu, has put India at the mercy of China. This plant used to contribute nearly 36% of India's total refined copper demand. Plus, copper concentrate availability is a challenge in India.
- India's increased copper consumption: India''s copper consumption rose 24% in FY'24 to around 779,000 t, from 630,000 t in FY'23. This increase drove copper cathode imports up by 133%. India's growing copper demand is driven by heightened industrial and infrastructure activities, which have allowed imports to compensate for the reduced domestic production. Despite an 8% drop in domestic production, exports dipped marginally to 56,500 t from 63,300 t y-o-y, also underscoring the need for cathode imports.
- Bharatmala a demand-booster: India's increased copper consumption is being facilitated by various mega infrastructure projects. These include the Bharatmala Pariyojana, one of India's largest highway development programmes. It was started in 2015 and aims to build around 80,000 km of roads. The government has allocated an estimated INR 5.35 lakh crore ($65 billion) for phase 1, which is expected to significantly boost the demand for raw materials, including copper which is crucial for electrical wiring, power cables, and telecommunication networks.
- Smart Cities Mission: Also launched in 2015, the Smart Cities Mission aims to develop 100 smart cities across India with a focus on sustainable and inclusive development and for which the government initially allocated INR 98,000 crore ($13 billion). Copper plays a vital role in this project because of its applications in energy-efficient electrical systems, renewable energy installations, and smart grids, which are integral to the smart city infrastructure
Approximately 60% of India's total copper consumption lies in electrical applications, includes building wiring, power cables, transformers, and motors.
- Increased smelting capacity on anvil: Kutch Copper, promoted by Adani Enterprises, is developing a 1 million tonesper annum (mntpa) copper smelter refinery complex at the Mundra Special Economic Zone. This plant is expected to reach full capacity by 2028-29 in a phased approach. The primary smelter will source copper concentrate from renowned global miners to produce copper cathodes and rods, among other value-added products. In 2023, Kutch Copper imported 1,122 t of copper, but by June 2024, the imports had surged to 12,503 t, indicating the company's rapid scaling-up efforts as it progresses toward full production capacity.
Outlook
The government is encouraging states to boost exploration and attract junior miners. States like Karnataka, Maharashtra, and Madhya Pradesh have already come up with bids for exploration licences. However, there have also been concerns about some of these licenses being in forested and wild-life areas. Given these potential ecological conflicts and an average lead time of approximately 17 years to develop a copper mine, India will need to continue to rely on imports of copper in the near-to-medium term, given its rising demand.
Domestic refined copper demand growth is expected to remain at around 11% in FY'24 and FY'25, as per some estimates.
Copper demand is expected to increase amid the electric vehicles (EVs) and infrastructure boom. Increased activity in EVs, power infrastructure, AI and automation sectors will likely lead to at least 10 mnt of additional copper consumption over the next decade.
Source:BigMint
