Copper as a Critical Mineral for India

Copper is considered a critical mineral for India for several reasons:

1.    Economic Importance: Copper is a vital component of the global economy and is widely used in various industries, including construction, electrical and electronics, transportation, and telecommunications. In India, the demand for copper is driven by infrastructure development, urbanization, and industrialization.

2.    Infrastructure Development: As India continues to invest in infrastructure development, the demand for copper in construction, power generation, and transportation sectors increases. Copper is essential for electrical wiring, plumbing, and various building components.

3.    Electrical and Electronics Industry: The growth of the electrical and electronics industry is a major driver of copper demand. Copper is a key material for electrical wiring, transformers, motors, and other electronic components. With the increasing use of electronic devices and renewable energy technologies, the demand for copper is expected to rise.

4.    Power Generation and Transmission: Copper is crucial for the power sector, especially in power generation, transmission, and distribution. It is widely used in power cables, transformers, and other electrical equipment. As India focuses on expanding its power infrastructure, the demand for copper is likely to grow.

5.    Automotive Industry: Copper is used in various components of automobiles, including wiring, radiators, and connectors. With the growth of the automotive sector in India, driven by increasing urbanization and disposable income, the demand for copper in this industry is expected to rise.

6.    Renewable Energy: Copper is a key material in renewable energy technologies such as solar panels, wind turbines, and electric vehicles. As India seeks to increase its renewable energy capacity, the demand for copper in these technologies will likely escalate.

7.    Supply Chain Security: Ensuring a stable and secure supply of copper is essential for India's industrial growth. Dependence on imports without a reliable domestic source could pose challenges, making copper a critical mineral for ensuring the security of the supply chain.

8.    Global Trends: Internationally, copper is recognized as a critical mineral due to its importance in various industries and the transition to a low-carbon economy. As India aligns itself with global sustainability goals, the demand for copper in environmentally friendly technologies will likely increase.

Ensuring a steady and secure supply of copper is crucial for India's economic growth, industrial development, and the achievement of its sustainability and energy goals.

1. Copper and the World

·         Chile accounted for almost a third of copper mine production & Peru accounted for 10 % of world mine production in 2020.

·         In 2020, China accounted for almost 50% of world smelter production, followed by Japan (8%), Chile (6%) & Russian federation (5%).

·         China accounted for 41 % world refined copper production, followed by Chile (10%), Japan (6%) and Congo (5%) in 2020.

Global level consumption

In the Year 2020 the World Refined Copper Consumption was 24.989 million tonnes whereas World Mine production was 20.634 million tonnes as copper metal & Refined Copper production was 24.51 million tonnes.

The global lockdown in 2020 led to a temporary reduction in refined copper uses in particular on ex-China basis. However, sustained growth in copper demand is also expected to continue as copper is essential to economic activity and even more so to the modern technological society. Infrastructure development in major countries such as China and India and the global trend towards cleaner energy and electric cars will continue to support copper demand in the longer term.

World ex-China refined copper usage declined by 9.5% in 2020 but it is expected to recover by 6.5 % in 2021 mainly due to general improvement in world economic conditions and manufacturing activity.

In contrast, Chinese apparent usage increased sharply in 2020 due to notable increase in imports of refined copper and is forecast to fall by 5 % this year as the quantity of refined copper imported is likely to be significantly lower. According to estimates by various consultants, real Chinese uses may grow by 3%.

For 2022, an expected continued recovery in the world economy will benefit copper end use sectors and should help sustain global growth of about 2.5% percent.

World refined copper balance for 2020 indicates an apparent deficit of about 560,000 t due to a strong Chinese apparent usage.

Over the first nine months of 2021, the World refined copper balance indicated a deficit of about 1,60,000 tonnes.

(Source: ICSG press release dated 7.10.21, 20.10.2021 & 20.12.21 – Copper: International Copper Study Group (ICSG) World Copper Fact book 2021)

2. Copper and lndia

Hindustan Copper Limited (HCL) was the sole producer of refined copper till 1995 and the focus was on vertical integration so that the entire quantity of ore produced in its mines was converted into copper cathode and ultimately, wire rod. After liberalization of the economy, the copper segment of industry has transformed significantly. Currently, three major players dominate the Indian copper industry. Hindustan Copper Limited (HCL) in Public Sector, M/s Hindalco Industries Ltd and M/s Vedanta in private sector, having current total installed refined copper capacity in the country 10.28 lakh tonnes. The capacity wise details are furnished below: -

Sl#	Company	Refined Copper Production Capacity (Tonne)	Type of Copper Producer	Location	Actual Production (Tonne)
					2017-18	2018-19	2019-20	2020-21	2021-22
1	HCL	68,500	CPSE (integrated producer)	Ghatsila, Jharkhand & Jhagadia, Gujarat	25,949	16,215	5,340	Nil	620.7*
2	Birla	5,00,000	Private (Port based custom smelter)	Dahej, Gujarat	4,13,806	3,47,000	3,25,568	2,62,203	3,58,890
3	Sterlite	4,60,000	Private (Port based custom smelter)	Tuticorin, Tamilnadu & Silvasa, Daman and Diu	4,03,206	90,000	77,490	1,01,435	1,25,104
Total		10,28,500			8,42,961	4,53,215	4,08,398	3,63,638	484615

Source: Ministry of Mines, Government of India website

HCL is the only vertically integrated copper producer in the country, while M/s Hindalco (plant at Dahej in Gujarat) and M/s Sterlite Industries (plant at Tuticorin in Tamil Nadu which is closed since May 2018) have setup port based custom smelting and refining plants. The total annual consumption of refined copper within the country is around 6.6 lakh tonnes during 2020-21.

HCL is the only producer of copper ore in the country. Copper ore production of HCL during last few years is in the range of 4.0 million tonne per annum (Mtpa) which is equivalent to 4.5% of the country’s requirement in terms of copper metal. HCL Owns all the operating mining leases in the country, mine expansion is under way, significant mining capacity expansion to be achieved from 4.0 Mtpa to 12.2 Mtpa in Phase I by FY 2028-29 and thereafter from 12.2

Mtpa to 20.2 Mtpa in Phase II. India is not self-sufficient on Copper mineral because of its low reserve/resource base. Custom Smelters in Pvt sector, imports copper concentrate as raw material to convert it into Refined copper. Currently the refined copper produced in India meets the Country’s demand to a certain extent and balance requirement is fulfilled by import.

Domestic level consumption

·         The total consumption of refined copper in the country in 2020 is around 6.60 lakh tonnes.

·         Electrical/Electronic Industry is by far the largest consumer of copper, where it is used in the form of cables, winding wires as it is the best non-precious metal conductor of electricity as it encounters much less resistance and is safe for electrical distribution system from high voltage transmission cables to micro-circuits.

·         Copper demand in electrical segment is growing due to demand in infra sector as a result of affordable housing schemes, rural electrification and more urbanization.

·         Copper demand in India is expected to grow due to increased thrust of Govt. of India towards "make in India" and "Smart City" programme, Atmanirbhar Bharat in Defense, 100 GW target for Renewable Energy by 2022, PLI schemes for Consumer electronics industry, Accelerated growth for Electric Vehicles and which will drive the demand of copper in the country.

·         Copper is essential to EV technology and its supporting infrastructure, and the increase in the electric vehicles in the market will have a substantial impact on copper demand. The projected demand for copper due to electric vehicles is expected to increase by 1.7 million tonnes by 2027.

·         The per capita copper consumption in India is expected to increase from the current level of 0.6 Kg to 1 kg in coming years. The average per capita copper consumption in the world is 3.2 kg. If India’s per capita copper consumption moves towards the per capita copper consumption levels in the rest of the world, India’s copper market has the potential for significant growth.

(Source- IBM - Indian Minerals Yearbook 2019 & ICSG Factbook 2021) 

3. Expected Growth / Projections of copper sector by 2030 (short term)

India's Internal Apparent Demand Forecast of Copper 2023-24 to 2049-50 (Base Year 2023-24 demand of 1522 thousand tonnes) (In '000 Tonnes)
Year	Apparent Demand at CAGR 12.2%	Apparent Demand at GDP 9%
2023-24	1522	1522
2024-25	1708	1659
2025-26	1916	1808
2026-27	2150	1971
2027-28	2412	2148
2028-29	2706	2342
2029-30	3036	2553

 

 

4. Expected Growth / Projections of copper covering Amrit Kal (Long term)

Table. India's Internal Apparent Demand Forecast of Copper 2023-24 to 2049-50 (Base Year 2023-24 demand of 1522 thousand tonnes)

Year	Apparent Demand at CAGR 12.2% (In '000 Tonnes)	Apparent Demand at GDP 9% (In '000 Tonnes)
2023-24	1522	1522
2024-25	1708	1659
2025-26	1916	1808
2026-27	2150	1971
2027-28	2412	2148
2028-29	2706	2342
2029-30	3036	2553
2030-31	3407	2782
2031-32	3823	3033
2032-33	4289	3306
2033-34	4812	3603
2035-36	5399	3927
2036-37	6058	4281
2037-38	6797	4666
2038-39	7626	5086
2039-40	8557	5544
2040-41	9601	6043
2041-42	10772	6587
2042-43	12086	7179
2043-44	13561	7826
2044-45	15215	8530
2045-46	17071	9298
2046-47	19154	10134
2047-48	21491	11046
2048-49	24113	12041
2049-50	27054	13124