India: Global ore squeeze stalls Adani's $1.2 billion copper smelter

• Smelter fails to source even 10% of annual concentrate requirement
  
  
• Mine disruptions tighten ore supply, lift treatment & refining charges
  
  

Indian tycoon Gautam Adani's $1.2 billion copper smelter in Gujarat is struggling to secure enough raw material, as a global ore shortage tightens supply for smelters worldwide.

Kutch Copper Ltd., which began operations in June after several delays, has received less than 10% of the concentrate needed to run its 500,000 tonnes (t)/year plant at full capacity, customs data shows. Between January and October, the company imported about 147,000 t of copper concentrate -- far lower than rival Hindalco Industries Ltd., which secured over 1 mnt during the same period.

The smelter requires roughly 1.6 mnt of concentrate annually to operate at full strength.

The global squeeze stems from widespread mine disruptions this year at major producers, including Freeport-McMoRan, Hudbay Minerals, Ivanhoe Mines, and Chilean giant Codelco. At the same time, China's aggressive smelting expansion has squeezed margins, forcing several non-Chinese smelters to cut production or shut down.

With supply tightening, treatment and refining charges have plunged to record lows, highlighting how smelters are accepting thinner margins just to secure feedstock.

For new entrants such as Kutch Copper -- aiming to double its capacity to 1 mnt in four years -- the shortage means higher operating costs and a prolonged ramp-up process. The plant may need to initially operate at a loss, with India potentially considering higher tariffs to shield domestic producers, a strategy that could bring "short-term pain for long-term gain."

Customs data shows Kutch Copper received shipments from BHP Group (4,700 t), along with supplies from Glencore and Hudbay.

The plant's slow scale-up underscores the challenges India faces in reducing its dependency on imported metals. Rapid demand growth from infrastructure, energy, and construction continues to outpace domestic ore availability and processing capacity.