Adani Group’s $1.1 bn copper project to start operations from March 2024

Billionaire Gautam Adani-led group’s copper-producing factory at Mundra in Gujarat will start operations from March next year, helping cut India’s dependence on imports and aiding energy transition, sources said.

Copper is known as the “metal of electrification” as deeper electrification requires wires, which are primarily made from copper. Technologies critical to the energy transition like electric vehicles (EVs), charging infrastructure, solar photovoltaics (PV), wind and batteries, all require copper.

Kutch Copper Ltd (KCL), a subsidiary of the group’s flagship Adani Enterprises Ltd (AEL), is setting up a greenfield copper refinery project for the production of refined copper with 1 million tonnes per annum in two phases.

For Phase-1, capacity of 0.5 million tonnes per annum, KCL has achieved financial closure through a syndicated club loan, sources with direct knowledge of the matter said.

The first phase is expected to become operational by the end of the current fiscal, they said.

Adani, at the company’s AGM a few days back, stated, “Of the several projects underway, two of the key ones include the Navi Mumbai Airport and the Copper Smelter, and both are on schedule”.

The Rs 8,783 crore-greenfield project completed a full debt tie-up with a consortium of banks led by SBI earlier this year, they said, adding the entire debt requirement of Rs 6,071 crore for Phase-1 has been provided by the consortium of banks.

The equity for the project has been invested by the parent Adani Enterprises Ltd. In addition, it has got all the major approvals in place to ensure timely execution.

Copper is the third most used industrial metal after steel and aluminium, and its demand is rising on the back of fast-growing renewable energy, telecom and electric vehicle industries.

India’s copper production has been unable to meet this demand, and domestic supply disruptions have led to a higher dependency on imported copper. India’s imports have been consistently on the rise for the past five years.

For FY23 (April 2022 to March 2023 fiscal), India imported a record 1,81,000 tonnes of copper, while exports plummeted to a record low of 30,000 tonnes, even lower than the pandemic period, according to the data from the government.

The country is estimated to have consumed 7,50,000 tonnes of copper in FY23 (612 KT in FY22). The number is expected to rise to 1.7 million tonnes by 2027 on the back of huge demand from the green energy industry.

Global demand for copper from solar photovoltaic (PV) installations alone is estimated to double to 2.25 million tonnes in the current decade.

Adani group, which is rapidly growing its renewable portfolio, will be a significant consumer of the red metal, sources said.

The strategically located plant at Mundra on the west coast will play a crucial part in the green energy infrastructure development, and encourage ‘Make in India’. The project has the potential to make the Mundra Special Economic Zone a hub for downstream ecosystems of value-added copper products going forward.

Sources said the location provides the additional advantage of access to lower cost and uninterrupted energy supply and logistical infrastructure to cater to domestic and international demand.

On the operational front, the company is engaged in long-term supply agreements for the key raw material — copper concentrate. This, along with strategic location and integrated value chain advantage, will help Kutch Copper to be one of the most sustainable and lowest-cost copper producers in the world, according to sources.

Keeping in mind the group’s ESG priorities, the plant’s sustainable solution-based project design will have zero liquid discharge. It will explore using green power and deploying byproducts for cement and other businesses.

In addition, the plant will be producing 25 tonnes per annum old, 250 tonnes of silver and 1,500 kilotonnes per annum (KTPA) sulphuric acid and 250 KTPA phosphoric acid as byproducts.

India imports roughly two million tonnes of sulphuric acid, which is a key raw material for manufacturing phosphatic fertilisers, detergents and speciality chemicals.

Globally, copper production is more concentrated than oil. The two top producers – Chile and Peru – account for 38 per cent of world production.

Demand growth during the energy transition – moving away from fossil fuels to renewable sources of energy – is projected to be pronounced in the US, China and Europe, besides India. By 2035, the US is projected to import up to two-thirds of its copper needs.