In the last few months, the demand for copper has gone up exponentially, and this has led to a huge surge in prices. As per a note by Bank of America, the prices of copper are expected to double to 20,000 dollars per metric ton by 2025 from the recent high of 10,000 dollars per metric ton. According to Michal Widmer, commodity strategist at Bank of America, the world risks running out of copper very soon and the commodity has ‘the new oil’.
India could have proved to be a big benefitter from the surge in international prices, but the Sterlite plant, that used to account for 40 percent of India’s total production, was shut down almost 3 years ago due to protest from anti-national elements that included China paid environmentalist and Church groups.
After the Sterlite plant was shut down facing a series of protests, India, a net exporter of copper in the last two decades turned into a net importer in FY 2018-19. The Tuticorin plant accounted for more than 40 per cent of the country’s total copper production, and ever since the plant was shut down, the domestic downstream manufacturers were forced to import copper from countries like Japan and China.
From 2013-14 to 2017-18, copper production in India grew at double-digit (9.6 per cent) and suddenly the output fell by 46 per cent in FY 19. The sudden closure of the Sterlite plant halted production of 4 lakh tonnes of copper, as the company accounted for 40 per cent of the country’s copper smelting capacity. The total copper smelting capacity of the country is around 10 lakh tonnes.
The total import of copper reached 14,000 crore rupees in the last fiscal year and countries like Japan, Singapore, Congo, Chile, Tanzania, the United Arab Emirates, and South Africa benefited from this. Imports rose by 131.2 per cent while the export of copper cathodes fell by 87.4 per cent, from 395-kilo tonnes in FY 18 to 48 KT in FY 19. In the last FY, exports grew by 12.3 per cent while imports grew by 35.6 per cent.
The majority of India’s copper export goes to China (75 per cent) and Taiwan (13 per cent). The closure of Sterlite’s plant benefitted Chinese companies which were facing tough competition from Indian exports. Given the better quality of Indian products, Chinese consumers preferred Indian copper, and this harmed the interest of Chinese companies.
After the protests, the Tamil Nadu government had ordered the complete closure of the plant in May 2018. But the National Green Tribunal (NGT) cleared the reopening of the plant a few months back. However, the Supreme Court overruled the NGT order, and the plant remains non-operational ever since. The matter is sub-judice and the case is pending in Madras High Court.
In Tamil Nadu, DMK and AIADMK, the opposition and the ruling party respectively, took a stand against the Sterlite copper plant. And this has led to India becoming a net importer of copper and the loss of crucial oxygen production during the pandemic.
Had the Dravidian parties not given up to the pressure of Naxal elements, church mafia, and anti-national protesters who were doing it on behalf of China, the state of Tamil Nadu was set to be the biggest benefactor of rising copper prices. However, the country is forced to import copper at a time when its price is skyrocketing, thanks to successful protest from anti-national elements.