Of the 50,000 tonnes installed capacity, while 20,000 tonnes of copper will be exported annually, around 6,000 tonnes will be consumed captively, leaving 24,000 tonnes for the domestic market.

Despite the two new copper smelters set up by Indo Gulf Corporation and Sterlite Industries of 100,000 tonnes per annum each, the domestic supply shortfall is expected to rise from around 55,000 tonnes in 1999-2000 to around 105,000 tonnes in 2004-05.

The company could be insulated from the recent price fluctuations on the London Metal Exchange (LME). Being a secondary producer, Swil will import scrap and residues as feedstock, prices of which will vary proportionately with that of copper on the LME.

Copper prices on the LME have hit historic lows, with prices plummetting to below the $1,500 per tonnelevels. This is expected to significantly hit the realisations of all copper companies, while the public sector Hindustan Copper is expected to post huge losses for the full year.

The smelter at full capacity will require 55,000 tonnes of copper residues, 20,000 tonnes of irony copper, and 9,400 tonnes of medium grade copper scrap as feedstock.

The technology from Boliden Contech of Sweden that Swil will use for the project, will also allow it flexibility in the use of raw materials. Swil expects to import scrap and residues from the Middle East, UK, Belgium and Germany.

The copper project, set up at an investment of Rs 640 crore, will produce 50,000 tonnes of grade A copper. Grade A copper, under LME norms, will give its cathodes a premium over other categories of cathodes.

To part finance the project, Swil is making a rights offer of 17.5 per cent fully-convertible debentures aggregating Rs 62.41 crore. In addition, Swil will make a public issue of FCDs with the same coupon aggregating Rs 53crore.

Each FCD will be converted into an appropriate number of equity shares at the end of 17 months from the date of allotment.

The company has also set up an environment management cell for continuous monitoring of environment related issues. Environment management has become a crucial issue for copper smelters anywhere in the world. Sterlite Industries recently had to close down its smelter after it got into a row with the pollution control board.