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Copper Industry’s Challenges and India’s status

Copper is one of the most important elements and is the oldest known commodity in the world that has a direct effect on the history as well as the world economy. A widely used metal in various sectors, copper is the third most used metal in terms of world consumption, after steel and aluminium. Copper and its alloys are used in a variety of industries, the largest user being the electricity sector owing to copper’s easy availability, affordability, not to mention that it is a good conductor of electricity.

Copper has universal availability and is found worldwide, but India’s copper scenario presents an interesting picture. Though there are copper mines in the country, India has to import almost 100 per cent of all copper ore from other countries due to India’s low level of production.

India has been importing from countries like Chile, Indonesia, Australia, and Canada with the import of ore and refined copper touching 18,86,199 thousand tonnes in the year 2015-16 (Statistical Profiles of Minerals, Indian Bureau of Mines). However even though India does not have surplus copper ore, with domestic production of copper being only 3,908 thousand tonnes in the same year, India has recently become a net exporter of a small amount of refined copper 11432 tonnes, thanks to the three major players in the copper industry, Birla Copper, Sterlite Industries, and Hindustan Copper Ltd (Statistical Profiles of Minerals, Indian Bureau of Mines).

India’s copper market is divided into two main parts:

  •  Primary

Primary sector comprises of the producers that convert ore into refined form of copper. The three companies that handle India’s copper sector, Birla Copper, Sterlite Industries and Hindustan Copper Ltd form this sector. Their task is conversion of copper ore into refined copper. As per the mining ministry, this sector has grown tremendously in the past few years, with an annual compounded growth of 25 per cent when it comes to imports.

  •  Secondary

Secondary sector is made up of producers that process refined copper to manufacture products like wires, foil etc. for consumption by the rest of the industries. As per the monthly summary of non-ferrous minerals and metals, December 2016 by the ministry of mines, India’s copper industry has domestic consumption demand of about 5 lakh tonnes out of which over 10 per cent is the share of MTNL and BSNL. The rest of the demand is met by construction and automobile industries.

 Challenges

Despite the growth, India’s Copper producers are going through a tough time lately and the state-owned Hindustan Copper, along with Hindalco and Vedanta have warned the government over the impending shutdown because of the cheap refined copper imports from Japan and other ASEAN countries that has decreased the operating capacity of Indian makers to about 75 per cent, hence putting at risk jobs of 10,000 people and the prospects of government’s Make In India initiative (Economic Times, October 14, 2015).

The producers argued that the free trade agreements by government which allow import of duty free copper, can make the India’s own sector redundant. Demands have been made by the top executives to make policies to stem the flow of imports within the country by a hike in import duties on refined copper products to 7.5 from existing 5 per cent. Imports from Japan and ASEAN countries have almost doubled and with the agreement of reducing the import duty to 0 per cent by 2021. India’s own industries thus may soon run out of market share and hence economic viability leading to production cut.

The Comprehensive Economic Partnership Agreement (CEPA) between India and Japan has led to an increase of almost 20 times in the import of copper cathode itself between 2013-14 and 2014-15, according to the data provided by the industry to the government to corroborate their figures.

 Endnote

The industry is however hopeful that the government will render them support in order to keep the industry afloat and maintain production levels. In fact, the Indian ministry of mines also put in a recommendation to the finance ministry for increasing the import duty to 7.5 per cent and restoring export incentive of 2 per cent on value of copper rods to ensure sector’s viability.

However the budget, didn’t include the demands of the copper industry, but with a boost to housing and other sectors in the budget 2017, there may be some allied growth in the copper industry.

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