Housing, capital goods help copper smelters

Medium and tiny secondary copper smelters that were shut about a year ago due to falling demand, are now considering reviving their units on prospects of demand from housing and capital goods sectors rising. These units produce over 40 per cent of the red metal produced in the country.

The revival of these units is significant as a number of secondary copper and allied industries would resume their operations and provide jobs to over 100,000 skilled and unskilled workers in addition to increasing the domestic availability of copper by 10-15 per cent from the present output of 1.4 million tonnes. As copper prices have declined to one-third, these units are chalking out capital availability to revive their units gradually.

“Funds from abroad have dried up. Local banks and financial institutions are going slow, especially for unorganised sector players. But, loan against property and stocks will be easily available and therefore, there will be no problem for working capital for these smelters,” said Surendra Mardia, president of Bombay Metal Exchange, the 50-year-old association of primary and secondary copper producers in the country. The exchange, with a membership base of over 500 from organised and unorganised primary and secondary producers has been representing over 75-80 per cent of copper output in India.

This is the right time for closed smelters to resume their operations if working capital needs are met.

These smelters, with the production capacity of up to 600 tonnes each per month were closed at a time when copper prices were hovering around $8,800 per tonne in April this year. Simultaneously, the prices of copper scrap, a major raw material for secondary copper manufacturing, was quoted around $4,000 per tonne which was proving unviable for these smelters to run their businesses.

Non-viability was the major problem these smelters faced because of the high prices of copper scrap and poor domestic demand. Additionally, the availability of copper scrap was adding to their worries.

“India’s real estate sector is immune to developments in rest of the world. Demand for commercial and residential properties has slowed down but not wiped out completely. But, given the measures taken by the government with the stimulus package and huge investment outlay for the power sector, the infrastructure sector is set to grow much faster in India than in other developing or developed nations. This will drive copper demand as well,” said Ajit Advani, CEO of International Copper Promotion Council (India), an Indian arm of the Lisbon-based International Copper Study Group.