India could become second-largest copper market by 2035: panel

By 2035, 4 million to 5 million mt of copper demand will make India the second-largest copper-consuming region behind China, according to a copper-dedicated panel at Dec. 2-4 Resourcing Tomorrow conference in London.

That demand growth should also favor local production gains through increased recycling and use of tougher concentrates, panelists said.

The global copper market benefits from the megatrends of urbanization, electrification, digitalization and the clean energy transition, as the metal is one sure thing they have in common for the sheer amount of electricity in play, according to Juan Ignacio Díaz, president of the International Copper Association, which through its 35 members represents half of the world's copper industry.

The association sees 70% of the world's copper demand concentrated in seven big manufacturing regions -- China, India, the US, Europe, Mexico, South Korea and Japan -- and across six applications -- motors, cables, transformers, EVs, air conditioning and heat pumps.

India is becoming increasingly important for the copper market, as the country uses 8%-10% more copper each year, with its demand growth rate among the fastest, according to Rohit Pathak, CEO of copper business at Hindalco Industries.

Fundamentals uphold robust pace

Over the last eight to 10 years, the entire country has been connected to the central grid; it now has the largest single national grid, and electricity use is soaring. Next comes renewables, where India is adding 300 GW of renewable power in the next five years, according to Pathak.

About 300 million people -- 20% of its population -- have been lifted out of poverty, and their place in the middle-income zone further boosts copper consumption.

There's massive urbanization happening as a result. In the next 10-15 years, three-quarters of India is expected to undergo development, getting housing, commercial spaces, factories and auxiliary infrastructure, Pathak said, summing up the factors that could take India's copper demand from 1.7 million mt today to as much as 5 million mt in the next 10 years.

Then, the air conditioning industry "is going crazy" given India's heat, and the ambition to become a hub for exports is there, as is India's base for own consumer electronics manufacturing.

The latter is already displacing imports that historically dominated the Indian consumer electronics market and is developed enough for Hindalco to build India's first major electronics recycling plant. Electronic waste is being processed in many parts in India, but in a crude, environmentally unsustainable manner, according to Pathak.

Hindalco is committed to doing it in a responsible method, and one that refines secondary copper to a high purity, which is key to safety.

"A lot of the fires that happen typically emanate from poor-quality copper in end-products," Pathak said.

To strengthen India's supply, Hindalco is also expanding its capability to handle more complex concentrates, because while general concentrate supply is tight, the market for tougher concentrates is still a little more open, he said.

Other regions big on copper have their own advantages. Europe remains attractive thanks to its great instruments for funding and its workforce, according to Tore Prang, vice president for corporate communications and external affairs at Aurubis, which processes 2 million mt of concentrates and 1 million mt of copper scrap annually.

Looking at Europe, by and large, Prang is not excited.

"The region is blocked by regulations to the point that some objectives are technically not achievable, and the demand to reduce CO2 to absolute zero makes investments in critical materials very difficult," he said. "Then, of course, you have very high energy costs."

Funding only thing that is missed

On the contrary, in the US "you get your license quickly, you have cheap energy and supportive regulations," Prang said, summing up the country as an desirable market with attractive conditions that only miss funding.

Aurubis has just opened its first recycling plant in the US, making it the country's third copper smelter, and is considering further growth there, given the country's supply deficit, bullish demand projections, ample scrap resources and revised government policy objectives.

"The US has always exported the copper scrap, but recently, the administration introduced quotas for copper scrap and announced that about 25% of the material should be processed in the country to reduce dependency on copper imports," Prang said. "For us, it's a very good move."

The US has also recently designated copper as a critical mineral, which, according to Díaz, should unlock more incentives.

India has done the same, and copper is a critical raw material in the EU.

China has not designated copper as a critical mineral, but it has embedded it into its industrial policy.

"They don't say it, but they act on it in their norms," Díaz said.

Competing with other materials

The London Metal Exchange copper benchmark set a record at $11,487.50/mt Dec. 3. Diaz said that besides the question of when the cost of copper starts harming demand, other aspects aside from price must be taken into account.

"We're transitioning from a fossil fuel economy to a material society, in which the competition is between materials, and the manufacturers are making decisions on which materials to use for their products," Díaz said. "Price is a big component of their choices, but they also want to build their technologies with something that is recyclable, available today, and 10, 15 or 20 years, they want a material that is produced responsibly, with low emissions, and is efficient, and they look at geopolitics, tariffs and export controls."

Copper has to compete on all these criteria, but the metal is 100% recyclable and so durable that over 60% of the copper ever produced is still used in various applications, Díaz said.