The $1.2 billion facility will start first phase operations by the end of March and will reach a total capacity of 1 million tonnes by FY29 (March 2029), two sources with knowledge of the matter said.
India joins China and other nations that are rapidly expanding production of copper, a metal crucial to the transition away from fossil fuels. All technologies critical to the energy transition, such as electric vehicles (EV), charging infrastructure, solar photovoltaics (PV), wind power and batteries, 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 production of refined copper with a capacity of 1 million tonnes per annum in two phases.
For Phase 1, with a capacity of 0.5 million tonnes per year, KCL achieved financial close through a syndicated loan from the club 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 energy and infrastructure,” one of the sources said. “It aims to become 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, growing penetration of electric vehicles and a host of associated applications are expected to double 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, making the copper business a strategic fit,” he said.
Copper is the third most used industrial metal after steel and aluminum, and its demand is increasing thanks to the rapid growth of the renewable energy, telecommunications and electric vehicle industries.
Indian copper production has been unable to meet this demand and domestic supply disruptions have led to increased dependence on imported copper.
India’s imports have been increasing steadily over the last five years.
For FY23 (FY April 2022 to March 2023), India imported a record 1,81,000 tonnes of copper, while exports plummeted to a record low of 30,000 tonnes, even less than during the period of the Covid pandemic, according to government data.
The country is estimated to have consumed 750,000 tonnes of copper in FY23 (612 KT in FY22). The figure is expected to rise to 1.7 million tonnes by 2027 thanks to huge demand from the green energy industry.
Global demand for copper from solar photovoltaic installations alone is estimated to double to 2.25 million tonnes in the current decade.
The Adani group, which is rapidly growing its renewable energy portfolio, will be a major consumer of the red metal.
Sources 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.”
They said the west coast provides Adani with an additional competitive advantage to seamlessly serve domestic and international markets.
Kutch Copper will produce copper cathodes and rods as well as valuable by-products such as gold, silver, selenium and platinum, they said.
In addition, the integrated complex will produce sulfuric acid, which is a key raw material for the manufacture of phosphate fertilizers, detergents, pharmaceuticals, specialty chemicals, paper and sugar bleaching, and water treatment. India imports approximately two million tonnes of sulfuric acid.
The plant will produce 500,000 tons of refined copper per year in Phase I with byproducts: almost 25 tons of gold, 250 tons of silver, 1.5 million tons of sulfuric acid and 250,000 tons of phosphoric acid. The Phase II expansion will increase refined copper capacity up to 1 million tonnes per year, the sources said.
“Construction of the copper complex (Phase I) is in advanced stages and the plant is expected to be operational in 2024,” the second source said.
The Adani copper plant comes at a time when Vedanta Ltd is looking to reopen a long-closed 400,000 tonne plant in Tuticorin, Tamil Nadu. The largest copper smelter in the country is currently operated by Hindalco Industries Ltd, which also has a capacity of 0.5 million tonnes.
“Its waste recovery strategy plans to take advantage of adjacencies and create markets for copper slag in road construction, cement and other applications,” said the second source.
Regarding the plant’s impact on global copper concentrate prices, sources said more copper concentrate assets would come online in future as a result of India’s new exploration and auction policy. Furthermore, upcoming mining projects around the world are likely to boost the supply of copper concentrate in the medium term, leading to a balance between supply and demand.
“Kutch Copper will be one of the most efficient copper smelters in India, with lower greenhouse gas emissions. Adani strives to increase the share of renewable energy in the overall energy mix in our quest to be a champion of ‘copper green,'” he said. the source said.
On the operational front, the company is committed to long-term supply agreements for the key raw material: copper concentrate. This, along with the strategic location and integrated value chain advantage, will help Kutch Copper to be one of the most sustainable and lowest-cost copper producers in the world.
Taking into account the group’s ESG priorities, the plant’s sustainable solutions-based project design will have zero liquid discharges. It will explore the use of green energy and the deployment of by-products for cement and other businesses.
Globally, copper production is more concentrated than oil production. The two main producers, Chile and Peru, represent 38 percent of world production.
Demand growth during the energy transition (away from fossil fuels towards renewable energy sources) is expected to be pronounced in the United States, China and Europe, in addition to India. By 2035, the United States is projected to import up to two-thirds of its copper needs.