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Two large companies Adani Enterprises Ltd and Aditya Birla group-owned Hindalco Industries Ltd are keen to source raw material from copper-rich Mongolia, but are concerned about the logistics of transporting copper concentrate from the landlocked Central Asian country to India.
Copper concentrates is a key input for refined copper, and India relies on imports for nearly 90 per cent of its supply due to limited domestic mining of this critical mineral. India imports its requirements almost entirely from Indonesia, Chile and Australia.
Mongolia exported copper ore worth $2.7 billion in 2022 and was the world’s 10th largest exporter of the commodity. Much of its exports go exclusively to China.
In a meeting in New Delhi with officials from the Union Ministry of Mines and India’s mission in Mongolia early July, representatives from Adani-owned Kutch Copper Ltd and Hindalco-owned Birla Copper Ltd sought more information on transportation facilities to evacuate copper concentrate out of Mongolia.
The company executives noted that the current arrangement, where Mongolian suppliers are responsible for transportation costs and logistics, posed “a hindrance in till-date trading” between the two countries, The Indian Express has learnt.
Officials in the Indian mission in Mongolia are learnt to have suggested that the companies should visit the Central Asian country to understand the trade dynamics and intricacies of logistics. They also recommended that the companies can then make a start by placing trial orders to get some practical experience of the opportunities and technical challenges that may arise during transporting copper ore and concentrates from Mongolia to India.
The officials listed the ports of Tianjin in China and Vladivostok in Russia as potential routes for Indian smelters to source copper concentrate shipments from Mongolia. Officials said the companies may visit Mongolia in October to explore opportunities of importing copper.
At present, there are only two possible options for evacuating shipments out of Mongolia– transporting them by rail to Tianjin or exploring the possibility of a combined road and rail route to Vladivostok, according to a person familiar with the development. Notably, the distance from major copper mines in Mongolia to Tianjin is only around 1,000 km, while the distance to Vladivostok exceeds 4,000 km.
Mongolia’s copper mining industry is dominated by two major producers — Oyu Tolgoi, majority-owned by global mining giant Rio Tinto, and Erdenet Mining Corporation, a state-owned company.
According to ICRA, demand for copper in India is expected to grow by 11 per cent in 2024-25. Given copper’s widespread industrial use, its demand is often seen as a barometer of economic activity. Refined copper is essential for the production of electrical equipment such as wiring and motors, consumer electronics, and construction. It is also heavily used in electric vehicle batteries and wind turbines.
India’s bilateral trade with Mongolia is heavily tilted towards exports. Last fiscal, India imported goods worth Rs 8.5 crore, mostly wool yarn and fabric, inorganic chemicals, and leather, and exported goods worth Rs 275 crore.
As far as copper concentrates is concerned, India’s imports in the first quarter of 2024-25 totalled Rs 6,788 crore, and were Rs 25,951 crore in 2023-24, almost entirely from Indonesia, Chile and Australia.
