Chennai: India’s push for EVs, railway electrification and green energy could result in higher demand for metals, especially copper. With domestic copper production remaining stagnant, it would reflect in higher copper imports, thereby resulting in stress on the nation’s forex reserve, say industry experts.
Indian Railways aims to achieve 100% electrification on all existing routes by 2024. The process of electrification and other expansion works will see a massive rise in the demand for copper. On the other, the thrust on EVs and green energy sources would further increase the demand for copper.
“The market for EVs is abuzz with activity, as government incentives facilitating sales, establishment of charging facilities and manufacturers launching new products. EV market is expected to grow at a disproportionate rate of over 48% by FY30. Copper is vital to the performance of several components in EVs,” Mayur Karmarkar, managing director, International Copper Association, India told TOI.
According to him, while an internal combustion engine car uses around 23 kg of copper, a battery-powered electric car could require up to 83 kg of copper. Charges will further add to the growing demand for copper. “Alongside the EVs, the rise of urban rail transit and electrification of railways is set to increase the demand for copper. Electric locomotives can contain as much as eight tonnes of copper. It is estimated that renewable energy will account for 40% of the nation’s power generation by 2030 and copper is the preferred material for green energy projects such as solar PV modules. Hence, India’s domestic copper consumption has the potential to grow rapidly soon,” Karmarkar said.
At present, India’s per capita consumption of copper is less than one kg as compared to global average of more than three kg, says Ankur Rastogi, vice president, AGR Knowledge Services Pvt Ltd, part of Avalon Global Research. “Copper demand is strongly linked to GDP growth in India. Any reduction in India’s GDP will also impact Indian demand. Unavailability of domestic copper will lead the downstream industry to import finished or semi-finished value-added products and this will have a dauting effect on already reducing foreign reserves and devaluing Indian currency,” Rastogi said. India was a net exporter of copper for close to two decades before the closure of the Sterlite Copper plant at Tuticorin in May, 2018 and India became a net importer of copper for the first time that year. “Already, Southeast Asia, Japan, and the Middle East have emerged as new trade partner countries for India. As per the DGFT data, the major copper imports from these regions include cathode, rods, tubes and pipes, plates and sheets, wires, and scrap,” he said.
“India earned a net foreign exchange inflow of $1.1 billion on account of the export of copper in 2017-18. But after the shutdown of Sterlite Copper’s smelter, India now incurs a net foreign exchange outflow of $1.2 billion due to imports of copper. Until the Sterlite issue is resolved or new production capacities come up, India will continue to import refined copper to a great extent,” said Karmarkar.
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