As copper mining stalls and imports surge, players eye overseas assets

Increasing reliance on imports

In FY19, copper ore production stood at 4.13 million tonnes (Mt), dropping to a low of 3.27 Mt in FY21, which then partially recovered to 3.78 Mt in FY24, according to data with the mines ministry. Similarly, copper concentrate production dropped by 13 per cent in FY24 compared to FY19.

In the copper value chain, copper concentrate is smelted into copper anode, which is then refined into copper cathode—or refined copper—essential for producing rods, sheets, wires, and other input goods. While domestic production of refined copper grew by 12 per cent between FY19 and FY24–from 454 kilotonnes (kt) to 509 kt–much of the growth was supported by surging concentrate and anode imports.

Despite stagnant production in recent years, government-owned Hindustan Copper Ltd (HCL), the only company in India that mines copper ore, ambitiously plans to triple output to 12.2 Mt by FY29 through the expansion of its existing mines. Even then, with the entry of greenfield refining capacities, like Kutch Copper’s maiden plant operationalised this year, and the expansion of existing capacities, demand for copper concentrate and anode imports is set to grow in the absence of adequate domestic mining.

Copper exploration lags

In India, copper ore reserves stand at an estimated 208 Mt, most of which are of low grade. Copper resources, however, total 1.51 billion tonnes, requiring extensive exploration to convert resources into reserves that are viable for mining.

The National Mineral Exploration Trust (NMET), under the mines ministry, oversees mineral block exploration in India. In FY24 and FY23, NMET approved only two copper exploration projects. Experts argue that insufficient exploration and a lack of private sector participation over the last decade have hindered the development of new mines.
Last year, the mines ministry modified rules to encourage private exploration agencies to explore critical minerals like copper. These changes come amidst a global slowdown in copper exploration, as new resources are believed to be deep-seated and expensive to explore.

Auctions fall short

Since FY16, only four copper blocks have been auctioned—two each in FY20 and FY24. The blocks in the last fiscal were awarded under a composite licence (CL), which requires licence holders to conduct further exploration before commencing mining operations. Globally, it can take up to 17 years on average to operationalise a copper mine.

While the government put two copper blocks on auction as part of its critical mineral auctions over the past year, they were annulled due to insufficient investor interest. Though the quality of reserves was not in question, potential investors were deterred by the blocks’ small size, only 1 square kilometre, The Indian Express has learnt. Since copper is a deep-seated mineral, block sizes must be large for mining operations to be commercially viable.

Experts believe India’s copper potential is vastly underutilised. Greater allocation of funds to private explorers and the privatisation of HCL—as suggested by Gouranga Sen, top policy executive at Vedanta, in a LinkedIn post in July—could propel copper mining in India.

However, in the near future, India may have no option but to strategically engage with copper-rich countries like Zambia, the Democratic Republic of Congo (DCR), and Chile, where equity in copper assets is available for offtake.

Ministry, industry set sights abroad

The Indian Express previously reported that the mines ministry was gauging interest among domestic players in securing overseas mineral resources, including copper assets in Zambia. The ministry also proposed sending an Indian delegation to Zambia, which participated in a joint working group (JWG) meeting held in Lusaka this June.
Notably, Vedanta owns a major copper mine and smelter in Zambia, which was seized by local authorities in 2019 before Vedanta regained control last September. The Zambian government holds a 20 percent stake in the project, which has 250 Mt of copper ore reserves.

To protect overseas mining assets amidst growing resource nationalism, the Indian government is exploring bilateral investment treaties with mineral-rich countries to de-risk investments, The Indian Express has learnt. Securing such assets through a bilateral mechanism is crucial for promoting outward investments, as a copper mine abroad can require an upfront capex of at least $10 billion.

Copper assets in Chile and DCR are also under the industry’s radar. In June, an Indian delegation led by the mines ministry visited Lubumbashi, DRC, to participate in a mining conference. In addition to acquiring copper assets overseas, the mines ministry is also assisting domestic smelters and refiners in developing new import sources, such as Mongolia.