Hind Copper bets big on electric vehicles, renewable energy to drive demand growth

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Published: August 1, 2019 1:25:00 AM

State-owned Hindustan Copper expects electric vehicles and renewable energy to drive the demand growth for copper in India, taking the per capita consumption from a level of 0.5 kg to 1 kg by 2020.

The projected demand for copper due to electric vehicles will increase by 1,700 kilo tonne by 2027, according to Santosh Sharma, CMD, Hindustan Copper.

State-owned Hindustan Copper expects electric vehicles and renewable energy to drive the demand growth for copper in India, taking the per capita consumption from a level of 0.5 kg to 1 kg by 2020. The projected demand for copper due to electric vehicles will increase by 1,700 kilo tonne by 2027, according to Santosh Sharma, CMD, Hindustan Copper.

Copper demand is expected to grow at 9.10% in tandem with the economic growth of the country. Renewable energy in the form of 100 giga watt of solar, 32 GW of wind, 62 GW of hydro and green energy corridor would drive the demand growth.

Coupled with the renewables, 260 GW of thermal and nuclear generation will lead the per capita copper consumption to 1 kg from 0.5 kg at present.

HCL is betting much on EVs to drive the demand growth since the government has set its goal in increasing EVs to 30% of the new vehicles registered on road by 2030. Andhra Pradesh plans to add 10 lakh EVs by 2024. Kerala wants to replace all KSRTC buses by electric buses by 2020. The government has also announced tax exemption and subsidy for auto rickshaws, which would be a major booster for EVs and down the line demand for copper.

Despite such boosters, per capita copper consumption in India would lag far behind the world average of 2.7 kg and Chinese average of 6 kg. HCL, which is the only owner of all copper mines in India, is in the process of ramping up its production, though high logistics cost, relatively smaller plants, aged equipments, old technology and limited value-addition of products remain its constraints.

“But there are large smelting capacities in India for which there is a ready market for HCL. But the threat lies in high volatility of London Metal Exchange copper prices and rising input costs that may put the demand on pressure,” Sharma said.

However, in view of ramping up capacities, HCL has, in its annual general meeting on Tuesday, cleared the board resolution of divesting 15% government holding, which would fetch it Rs 1,400 crore. The Cabinet Committee on Economic Affairs (CCEA) cleared the proposal of divesting 15% government holding in August 2018.

The company would offer 13, 87,82,700 equity shares with a face value of Rs 5 each “in India or in the course of international offering in one or more foreign markets to qualified institutional buyers”. The offer will bring down the government holding from current 76.05% to 66.13%. The proceeds of the offering would mainly be used for funding the planned capacity expansion, an HCL official said, adding that in FY19 HCL has made a total capital expenditure of Rs 602 crore, mainly funded from internal accruals.

While the company has produced highest ever copper ore in last 21 years at 41.22 lakh tonne in FY19, its total sales of metal in concentrate, cathode and CC Wire Rod was 38,273 tonne in FY19 compared to 36,435 tonne in FY18.

The company’s net profit jumped 83% to Rs 145.74 crore, which gave it a major facelift to hit the capital market once again. However, HCL’s value of produce decreased to Rs 1,709.69 crore in FY19 from Rs 1,767.45 crore the previous year.

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