‘Copper is critical for the clean energy transition… In India, strong demand from this sector may emerge by 2030’

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. If you see the scale of clean energy technology production happening in China– 80 per cent of the world’s solar panels and 60 per cent of electric vehicles (EVs). If you look at offshore wind power installation, China is leading there as well. As a result of that, 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 going forward, we still require further investments in smelting and refining.

Another important thing to remember is that copper is a 100 per cent recyclable metal– it allows for a circular economy. We have a larger dependency on recycled copper or scrap. But going forward, we also see scrap being remelted and refined in the country. In fact, Hindalco has announced the setting up of a scrap recycling unit of initially a small capacity. I’m sure that large corporations are looking at recycling very minutely and that future investments for recycling critical minerals will also come in line.

Some Indian companies are also looking at acquiring copper mines overseas. Any comments on this strategy?

Indian companies buying mines overseas is a good step. Vedanta had mines abroad earlier, which went into litigation from the host government. It is the right time for the government to see how they can protect Indian investments overseas through diplomatic relations and minimise political risk. If there is some security mechanism there, I’m sure the private sector will definitely invest in copper or critical mining abroad. The government itself is trying to do that with KABIL. So, definitely that’s encouraging news. After oil, critical minerals have become the new energy now, so acquiring those resources is critical. We are late in this race, I must say. China started more than 15 years ago– it is very strong in Africa at the moment. Japanese investments in overseas mining can be seen in Latin America. Overall, the private sector will be more enthusiastic if there is some protection from the government, at least with regards to political risk at the local level. Especially because of the de-globalisation scenario, all those mining assets are also getting nationalised. In order to avoid such risks, government involvement is very important.

Currently, what is the market for scrap copper and what are some of the limitations associated with it?

As per our recent study, in our total supply equation, we have a huge element of scrap copper. Today, we have almost 575,000 tonnes of scrap in the Indian system, some of which is imported also. However, it is mostly being used after remelting and not refining. Just remelting creates problems related to the quality of copper. For example, as per good practice, when you recycle copper, you take out the impurities and make it 99.9 per cent pure through certain processes. But we don’t have enough invested in those processes because MSMEs, who are mostly responsible for recycling, do not have the investments nor capabilities to set up new technologies. But with big companies coming into recycling, the investments and technologies will also come, which can convert copper to its refined form, which can further be directly substituted to the primary production of copper.

But that doesn’t mean that remelting copper is useless. In India, we have a total demand of 1.5 million tonnes, out of which around 575,000 tonnes was remelted. We use remelted copper in brass alloys. It is also used in electrical conduction, which should not be the case. For example, the total demand for magnet wires used for winding was 486,000 tonnes out of which 185,000 tonnes was met by directly remelting copper. In wires and cables, too, almost 25 per cent of the demand was met with directly remelted copper. This should not be happening as it creates quality problems in the end product. For instance, if building wires are not made out of refined copper, it creates a risk of electrical accidents and fires. Similarly, with winding wires, which are used in agricultural motors, the energy losses are much higher. It is essentially consuming additional energy because of impurities.

Can you explain the relationship between copper and energy efficiency in buildings?

Work on energy efficiency in buildings is happening on two fronts– cooling and the overall electrical infrastructure. Because of global warming, the need for air conditioners will be more and more. Air conditioners require copper in the form of tubes, fans, compressors, and many other components. Secondly, with electrical infrastructure, which is power distribution within the building itself, the average load requirements for buildings are increasing, especially with the integration of EV charging infrastructure. That is going to require more copper in terms of wiring and to make it more efficient, it has to be sized properly. For ensuring safety and efficiency, we have to ensure that good quality copper is installed in the electrical infrastructure. With the entire architectural requirements of buildings changing, we need to lower power distribution losses and install efficient transformers, for which working with copper is key.

Is there any work happening on reducing the usage of copper while at the same time improving efficiency?
The global automotive sector is working on reducing the weight of copper used in batteries. In fact, recent research says that the weight of copper required in a battery electric vehicle, which is 60 kilograms plus, may reduce by 50 per cent going forward. For example, in the case of copper foil, when EVs started the foil thickness was about 20 microns. It has now gone down to 6 microns with new technologies coming in. With this, which we call miniaturisation, material efficiency is improving.