Indonesia is likely to stop exporting copper concentrate from December this year to promote value-addition back home. This could create problems for Indian copper firms depending on these imports, Mayur Karmarkar, Managing Director, International Copper Association India (ICA India), has said.

Indonesia is one of the major sources of copper concentrates for India, which imports it duty-free due to the ASEAN Free Trade Agreement. “Indonesia is adding to its smelter capacity. The problem could aggravate a bit quickly. The government has to reduce duties on copper concentrates (from other sources) or allow imports at zero duty,” he told businessline in an online interaction.

Demand to rise

India’s demand for copper concentrate is likely to increase as the Adani Group’s Kutch Copper Plant would also require it. 

Allowing copper concentrate at a lower or zero duty would ensure a level playing field for domestic smelters and refiners, particularly when copper cathodes are being imported duty-free from Japan, he said. 

The Government has understood the problem and is trying to work out a solution with African countries, Peru and Russia, he said. 

Mayur Karmarkar, Managing Director, International Copper Association India

Mayur Karmarkar, Managing Director, International Copper Association India | Photo Credit: http://www.facebook.com/pondphot

While the country is trying to achieve net zero emissions in which copper plays a critical role, the inverted duty structure, where finished products are levied import duty lower than raw materials such as concentrates, is an issue that confronts the domestic industry. For example, copper tubes are coming from South-East Asia duty-free.

Double-digit growth

Indian smelters depend on concentrates as none of them own mines. “They have to buy the concentrate to make copper cathode,” Karmarkar said.

During the 2023-24 fiscal, the copper sector witnessed double-digit growth, largely driven by infrastructure. “Refined copper demand was largely met through imports. With demand growing, there is a constraint related to refined copper capacity. We hope this will be addressed to some extent by the Adani Group’s copper plant,” the ICA India managing director said. 

The industry is faced with the quality control order but there is some breather now as it will be enforced only from December-end, he said. 

This will also mean that by December-end, all importers will have to get certified for Bureau of Indian Standards (BIS) quality and start supplying the material. “I am sure the Japanese cathode makers have started working in that direction and they will comply with the requirements soon,” said Karmarkar. 

Depending on traditional growth

On the other hand, the domestic industry is fully prepared with Hindalco and Vedanta being able to supply the cathodes.  Currently, there is no domestic production of inner groove tubes used in air conditioners but its production will likely begin in the next 2-3  months, he said. 

 With the Adani Group’s copper plant going on stream, refined copper production will increase, he said. 

Demand for copper will continue to grow at the same rate as last fiscal, while globally, clean energy transition is expected to drive demand. India is still depending on traditional drivers of copper demand, mainly infrastructure, the ICA India official said.

With many States implementing metro rail schemes, each metro coach will require 2.5 tonnes of copper. “Or each electrified railway route will require six tonnes per km of copper,” he said.

The 5G technology is coming up in a big way and each 5G base station will require 70 kg of copper. The construction sector will likely see a demand of 30 gm per sq feet, Karmarkar said.   

Demand for clean energy transition and technology in India is currently 4 per cent of the total 1.5 million tonnes demand. “We expect it to be up to 5 per cent in 2024. But we will see substantial change, particularly due to PM Surya Ghar Muft Bijlee Yojana and offshore green and nuclear power generation capacity,” the ICA India managing director said. 

The creation of a performance-linked incentive (PLI) programme for  clean energy technologies will also lead to a rise in demand for the red metal, he said.