Copper Crisis: Copper, often seen as a reliable indicator of economic health, is poised to witness a significant surge in demand over the next decade. This uptick is expected across various regions globally, but India, in particular, is facing unique challenges. Amid stagnant domestic production, India has had to rely increasingly on copper concentrate imports, which have doubled from Rs 13,000 crore in FY19 to Rs 26,000 crore in FY24. As the country’s copper demand continues to grow, Indian smelters and refiners are now turning their attention overseas, exploring foreign copper assets with some backing from the government.
Copper’s Critical Role in Clean Energy
Copper has recently been designated a critical mineral, largely because of its role in clean energy technologies. Whether it’s the wind turbines that power renewable energy or the batteries that drive electric vehicles, copper is an essential component. As India’s commitment to clean energy grows, so does its reliance on copper imports. The situation has shone a spotlight on India’s dependency on external sources of this vital mineral.
To mitigate this reliance, India has been looking to countries with rich copper deposits, such as Mongolia, Zambia, and Chile. Companies like Hindalco’s Birla Copper Ltd, Adani’s Kutch Copper Ltd, and Vedanta’s Sterlite Copper Ltd have been collaborating with the Ministry of Mines to secure the nation’s copper supply chain.
The Increasing Reliance on Imports
India’s domestic copper production has struggled to keep up with demand in recent years. In FY19, copper ore production was 4.13 million tonnes (Mt), but this fell to 3.27 Mt in FY21 before recovering to 3.78 Mt in FY24. Even though there was some recovery, production remains far below what’s needed to meet the country’s growing demand for refined copper.
Copper concentrate production has similarly decreased, with a 13 percent drop between FY19 and FY24. This concentrate is smelted into copper anode and then refined into copper cathode—essential materials for manufacturing products like copper rods, sheets, and wires.
Despite a modest 12 percent growth in domestic production of refined copper (from 454 kilotonnes in FY19 to 509 kilotonnes in FY24), this growth has been driven primarily by increasing imports of copper concentrate and anode. In other words, the growth in domestic refined copper production is heavily reliant on external sources.
Hindustan Copper Ltd (HCL), the only company in India mining copper ore, has ambitious plans to triple output to 12.2 Mt by FY29. However, this increase still may not be enough to meet demand, especially with new greenfield refining capacities like Kutch Copper’s recently operationalized plant, which is expected to drive even more demand for copper imports.
The Lag in Copper Exploration
India has significant copper resources, with an estimated 1.51 billion tonnes in total resources and 208 Mt of copper ore reserves. However, most of these reserves are of low-grade quality. The challenge lies in converting these resources into reserves that are economically viable for mining. Exploration is the key, and this is where India has lagged.
In FY24 and FY23, the National Mineral Exploration Trust (NMET), which is responsible for mineral block exploration, only approved two copper exploration projects. Experts argue that insufficient exploration and limited private sector participation have hindered the development of new copper mines. Without more exploration, India’s ability to reduce its dependence on imports will remain constrained.
To address this, the government has made efforts to encourage private exploration agencies to take part in critical mineral exploration. However, exploration globally is becoming more difficult and expensive, as new copper resources are often located deep underground.
The Shortcomings of Auctions
Since FY16, only four copper blocks have been auctioned, and even then, the results have been underwhelming. The last two blocks auctioned in FY24 were small in size, only about 1 square kilometre, which deterred potential investors. Copper is a deep-seated mineral, and for mining operations to be commercially viable, the size of the blocks needs to be much larger.
Even though India has potential, experts believe that its copper mining industry remains vastly underutilized. A greater focus on private sector involvement and perhaps even the privatization of Hindustan Copper Ltd, as suggested by Vedanta’s policy executive Gouranga Sen, could help unlock India’s copper mining potential.
Looking Overseas for Copper
In the near term, India may have no choice but to secure copper assets abroad. The Ministry of Mines has been actively exploring opportunities in copper-rich countries like Zambia, the Democratic Republic of Congo (DRC), and Chile. In June, an Indian delegation attended a mining conference in Lubumbashi, DRC, as part of an effort to explore partnerships and acquire overseas copper assets.
Zambia, in particular, holds significant promise. Vedanta, one of India’s leading mining companies, already owns a major copper mine and smelter in Zambia. Though the mine was seized by local authorities in 2019, Vedanta regained control in 2023. The project has 250 Mt of copper ore reserves, and the Zambian government holds a 20 percent stake.
The Indian government is also working to protect overseas mining investments from resource nationalism by exploring bilateral investment treaties with mineral-rich countries. Such treaties would provide legal protection for Indian companies investing in foreign copper assets, making it safer for them to commit the substantial capital required for copper mining.
The Road Ahead for India’s Copper Supply
Securing copper assets abroad is crucial for India’s future. With domestic production unable to meet rising demand and the growing importance of copper in clean energy, India’s reliance on foreign sources is likely to continue increasing in the short term. Companies like Vedanta, Adani, and Hindalco will need to continue working closely with the government to secure the country’s copper supply.
While India’s copper resources remain underutilized for now, with the right investments and policy changes, the country could still unlock its full potential. But in the meantime, strategic engagements with copper-rich countries will be key to meeting the country’s growing demand for this critical mineral.