In a significant development for India’s energy sector, billionaire Gautam Adani-led Adani Group is gearing up to kickstart operations at its copper-producing factory in Mundra, Gujarat, starting from March 2024. This ambitious project, valued at USD 1.1 billion, is expected to not only reduce India’s dependence on copper imports but also play a crucial role in supporting the nation’s ongoing energy transition.
Copper is commonly referred to as the “metal of electrification” due to its vital role in various electrical applications. As electrification continues to penetrate deeper into different industries, the demand for copper has witnessed a substantial surge. It is predominantly used in the manufacturing of wires, which serve as the backbone of electrical infrastructure worldwide.
For the initial phase of the project, Adani’s subsidiary, Kutch Copper Limited (KCL), has secured financial closure by availing a syndicated club loan. This will enable the company to establish a capacity of 0.5 million tonnes per annum. According to sources familiar with the matter, the first phase is expected to be fully operational by the end of the current fiscal year.
During the company’s recent Annual General Meeting, Gautam Adani expressed confidence in the progress of multiple projects, including the Navi Mumbai Airport and the Copper Smelter. He affirmed that both ventures are proceeding as per the established timelines.
The greenfield copper project, valued at Rs 8,783 crore, successfully secured complete debt tie-up earlier this year. A consortium of banks led by the State Bank of India (SBI) provided the entire debt requirement of Rs 6,071 crore for the first phase of the project. On the equity front, Adani Enterprises Ltd., the parent company, has invested significantly to make the project a reality. Additionally, all the necessary regulatory approvals have been obtained to ensure the smooth execution of the project.
Copper holds a prominent position as the third most widely used industrial metal globally, trailing behind steel and aluminium. With the rapid growth of renewable energy, telecom, and electric vehicle industries, the demand for copper has soared exponentially. However, India’s domestic copper production has struggled to keep up with this escalating demand, leading to an increased reliance on imported copper.
Over the past five years, India’s copper imports have experienced consistent growth. In the fiscal year 2022-2023 (April 2022 to March 2023), the country imported a record 1,81,000 tonnes of copper, while exports plunged to a record low of 30,000 tonnes, even lower than during the pandemic period. Such supply disruptions within the country have further exacerbated the dependency on imported copper.
In the same fiscal year, India’s copper consumption reached an estimated 7,50,000 tonnes, a notable increase from the 612,000 tonnes consumed in the previous year (FY22). Experts predict that by 2027, the demand for copper is expected to surge to 1.7 million tonnes, largely driven by the burgeoning green energy industry.