‘Copper production to rise on Sterlite unit reopening’

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Chennai | Published: December 19, 2018 12:07:43 AM

Given the fall in production can be limited with the possible resumption of the Tuticorin smelter, the rating agency said it had revised estimates.

‘Copper production to rise on Sterlite unit reopening’

The copper production would improve on the back of the National Green Tribunal (NGT)’s verdict, which is in favour of Sterlite Copper of Vedanta group. This will result in reopening of the 400,000-tonne per annum copper smelter in Tuticorin. The smelter is expected to receive a fresh order of renewal of consent within three weeks from the Tamil Nadu Pollution Control Board.

Hence, the production of refined copper would be around 380,000 tonne by the end of FY19 and the output of domestic copper to fall by 54.9%. So far, during the current fiscal year FY19, domestic copper output has been 244,000 tonne in April-October , said CARE Ratings analysis on Tuesday.

According to CARE, it was earlier predicted the production of domestic copper would fall by 60.7% to 331,000 tonne, against the level of production achieved during FY18 (India’s refined copper production during FY18 was 843,000 tonne).

Given the fall in production can be limited with the possible resumption of the Tuticorin smelter, the rating agency said it had revised estimates.

The closure of the Tuticorin smelter had resulted in a sharp fall in production. Domestic refined copper output had fallen by 42.1% during the first half of the current year (H1 FY19). The drop in domestic output during H1 FY19 had led to the domino effect of a sharp increase in the country’s imports and fall in the exports thus turning India into a net importer of refined copper (India used to be the net exporter of refined copper). Exports have fallen by 93.6%, whereas imports have increased by 167.9%.

The closure of the Tuticorin smelter had also resulted in the shortage of sulphuric and phosphoric acids, which is produced as by-product and used as raw material for the manufacturing of fertilisers, thus adversely affecting the downstream chemical and fertilisers industry of South India (market where it mainly caters to).

Demand for domestic copper is largely dependent on the electrical and telecom (56%), automobiles (8%), building & construction (7%), consumer durables (7%) and general engineering (6%) segments. The agency estimated domestic demand is about 430,000-435,000 tonne during FY19.

The Smart City development, impetus on increase of renewable energy, demand from the automobile segment and capex activities related in the railways and defence sector are likely to further support domestic demand for the metal.

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