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Adani's Kutch Copper in Major Sourcing Talks with BHP for Rs 30,000 Crore Supply Agreement

Adani's Kutch Copper in Talks for Rs 30,000 Crore Deal with BHP

Adani-controlled Kutch Copper is reportedly negotiating a significant copper concentrate supply deal with Australian mining giant BHP, which could be valued at around Rs 30,000 crore per year. The potential agreement involves sourcing up to 1.6 million tonnes per annum (mtpa) of copper concentrate, as reported by The Economic Times. The final value of the deal may fluctuate due to market volatility in copper prices.

Rising Copper Prices

Currently, copper prices on the London Metal Exchange (LME) stand at approximately $9,474 per tonne. Market forecasts predict a rise in prices, potentially reaching $9,715 per tonne within the next three months and possibly exceeding $10,000 per tonne by December 2025.

Kutch Copper, a subsidiary of Adani Enterprises Ltd, recently commissioned its first copper refinery unit in Mundra, strengthening its foothold in the industry. The company is investing around $1.2 billion to build a copper smelter with an initial capacity of 0.5 mtpa, with plans to double this capacity to 1 mtpa in a second phase. Once completed, this facility will be the world's largest custom copper smelter at a single location.

BHP's Role in Copper Supply

BHP is a leading supplier of copper, sourcing it from prominent locations like Chile, Australia, Argentina, and Arizona. It is the largest supplier of copper concentrates to India, where domestic demand greatly exceeds production capacity. Indian companies typically import copper concentrate containing about 25% copper, which is then processed in local smelters. Pricing for these supply agreements is influenced by the London Metal Exchange rates, as well as factors like currency hedging, freight costs, and treatment and refining charges.

India's Growing Copper Demand

In India, Hindustan Copper Limited is the only public sector entity producing copper ore, contributing approximately 4.0 mtpa, which is just 4.5% of the country's total copper concentrate requirements. The Union Mines Ministry estimates that per capita copper consumption in India is expected to increase from 0.6 kg to 1 kg, compared to the global average of 3.2 kg. This growing demand highlights India's significant reliance on copper imports and the increasing need for sourcing agreements like the one being negotiated between Kutch Copper and BHP.