As copper mining stalls and imports surge,players eye overseas assets
- Copper demand, a key barometer of economic growth, is poised to surge over the next decade across geographies
Highlights:
- Copper, a critical mineral, is essential for clean energy technologies such as wind turbines and electric vehicle (EV) batteries.
- Global copper demand is expected to surge over the next decade, positioning the mineral as a key barometer of economic growth.
- However, India's domestic copper production has stagnated, leading to a significant rise in copper concentrate imports, which doubled from ₹13,000 crore in FY19 to ₹26,000 crore in FY24.
India's Rising Copper Imports:
- Stagnant Domestic Production: India’s copper ore production has been inconsistent, falling from 4.13 million tonnes (Mt) in FY19 to 3.27 Mt in FY21, and recovering slightly to 3.78 Mt in FY24.
- Increase in Concentrate Imports: Refined copper production increased by 12% from FY19 to FY24 but was heavily reliant on imported copper concentrate and anode.
- Key players such as Hindalco’s Birla Copper Ltd, Adani’s Kutch Copper Ltd, and Vedanta’s Sterlite Copper Ltd are exploring international sources to meet growing demand.
- Focus on Overseas Copper Assets: Indian companies, with support from the Ministry of Mines, are looking to acquire copper assets in countries like Zambia, Chile, and Mongolia to secure a stable supply chain.
Exploration and Mining Challenges in India:
- Copper Resource Potential: India has 1.51 billion tonnes of copper resources, but only 208 Mt are classified as reserves, largely due to the low grade of ores and limited exploration.
- Lagging Exploration: The National Mineral Exploration Trust (NMET) approved only two copper exploration projects in FY23 and FY24, highlighting the need for more robust exploration efforts.
- Private Sector Involvement: Despite new rules aimed at encouraging private exploration, participation remains low. Experts argue that insufficient funding and slow-paced reforms hinder the development of new copper mines.
Auctions and Block Development:
- Low Auction Turnout: Since FY16, only four copper blocks have been auctioned, with the latest two being awarded under a composite licence (CL), requiring further exploration before mining can begin.
- Investor Hesitation: Investors have shown limited interest in copper blocks due to their small size (1 sq km), deterring potential mining operations that require larger areas for commercial viability.
Overseas Investments and Government Support:
- Overseas Copper Assets: With domestic copper potential underutilised, India may need to look abroad to secure copper supplies. The government is engaging with Zambia, Democratic Republic of Congo (DCR), and Chile, seeking equity in copper mines.
- Bilateral Investment Treaties: To protect overseas investments amidst growing resource nationalism, India is exploring bilateral investment treaties to reduce risks for Indian companies seeking foreign copper assets.
Industry and Government Collaboration:
- Government Initiatives: The Mines Ministry is actively supporting Indian companies in securing international copper assets and exploring new import sources like Mongolia.
- Vedanta’s Zambia Project: Vedanta, a key player in India’s copper industry, regained control of a Zambian copper mine that holds 250 Mt of copper ore reserves, further strengthening India’s overseas foothold.
Prelims Highlights:
- National Mineral Exploration Trust (NMET)