‘Copper is key to energy transition, strong demand in India may emerge from 2030’: Mayur Karmarkar

‘Copper is key to energy transition, strong demand in India may emerge from 2030’: Mayur Karmarkar

With demand for copper growing annually at 16 per cent in FY23, policymakers and corporations have increasingly turned their attention to its critical role in spurring economic growth. Mayur Karmarkar, India team leader at the International Copper Association, speaks to Aggam Walia about India’s copper import dependency and domestic copper demand.

Copper demand is often seen as a barometer of economic activity. Can you explain why?

Unlike most other commodities, copper prices are linked to three things — the demand/supply scenario, the overall money market and the speculative environment. A combination of these three also works very well for oil. If you track copper and oil prices, they move more or less together. It is therefore a global economic indicator by and large. Also, unlike other commodities which are dependent on very specific sectors, copper is used in all the sectors of the economy.

Can you give an overview of copper demand in India compared to other parts of the world?

Copper is critical for the clean energy transition and that’s very evident in markets like China and Europe. The demand for copper coming from China is largely attributed to clean energy technologies, just as in Europe.

But in the case of India, our traditional demand drivers are much stronger because we still have to build basic infrastructure. If you see the overall copper demand growth in India for the last financial year, we had around 11 per cent growth in building construction, 14 per cent growth in power infrastructure, 13 per cent growth in consumer durables, and 14 per cent growth in overall industrialization, largely because of the PLI schemes. Then, there was 34 per cent growth in transportation, within which railways had a huge share. We saw a modest growth of 6 per cent in the agricultural sector. This is very different from other parts of the world where they did not see much growth in the traditional sectors. Overall, copper growth in the world is still 3 to 4 per cent, which is similar to previous decades, so there has not been much change in overall demand but the pattern has changed. In India, strong demand from the clean energy sector will emerge maybe from 2030 onwards, but it is not very sizable at the moment.

The government has included copper in its list of critical minerals and there is an ongoing auction for the exploration of copper blocks. What impact will these steps have on India’s dependency on copper imports?

The government has understood the need for local production of copper but that does not mean that it will lead to sufficiency. For example, our total mine resources were around 1.6 billion tonnes, which is a huge number. However, reserves are around 136 million tonnes, out of which we hardly mine 20,000 to 25,000 tonnes of copper. The government has now come up with an auction for critical minerals, of which copper is a part. The most important question is: Why has no mining or exploration happened in the country up till now? This is because the mining sector was represented by state mining departments, which gave priority to minerals which they can access easily and convert into immediate markets — like coal, iron ore, and limestone.

Now, the central government has taken leadership in the mining of critical minerals, which is going to create a larger availability of locally-mined copper. But that does not mean that our import dependency will be low. In fact, world over, copper concentrates are mined in the southern hemisphere and are exported to countries like the US, Japan, South Korea, and China. So, we will be one of them — a buyer. The government is also looking at the processing of critical minerals because that is where China still has dominance globally.

What is the current scenario of copper processing infrastructure in India?

In the late 1990s, India was the leader in copper processing when Hindalco and Vedanta put up their own smelters. But unfortunately in 2018, due to issues at the Vedanta smelter in Tuticorin, we were largely import dependent even for processed copper. But hopefully, with Adani’s recent announcement of $1.2 billion investment in a copper processing unit and an eventual resolution at Tuticorin will take us to a comfortable position. In the near future, we won’t have to import copper cathodes anymore if these two smelters come in quickly. But we still require further investments in smelting, refining.

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