Copper

Last Updated: Jun 11, 2014, 01:24 PM

Copper, one of the first metals known to humans and historical evidence suggest that copper was mined in the Tigris-Euphrates valley as long ago as the 5^th Century B.C. The use of copper in ancient times was more extensive than any other metal particularly for tools, implements and weapons. The symbol for copper is Cu and comes from the Latin cuprum.

Copper is a soft and pliable in its pure form and its mixed with a number of other metals and used for various industrial as well as domestic applications. It is a good conductor of heat and electricity. Copper is a slow corrosive metal. It doesn’t react with water but reacts to atmospheric oxygen and forms a layer on the surface. Hence, the corrosion is restricted to the top layer and doesn’t spread extensively as in the case of iron.

Important Uses:

Copper is widely used in industrial applications ranging from defense, space programme, railways, power cables, mint, telecommunication cables, etc. In addition, copper is essential element for all living organisms in traces as a dietary mineral. Copper compounds are also used in fungicides and wood preservatives.

Products: cathodes, wire rods, billets, ingots, tube, sheet, plate, strip, castings, powder and other shapes. Alloy semis for downstream industries such as automobiles, appliances, electronics etc,

Mineral Sources:

Although copper can be found free in nature the most important sources are the minerals cuprite, azurite, malachite, chalcopyrite, chalcocite and bornite. These ores contain about 0.5 to 2% of copper. Approximately 80% of the world’s primary copper originates in sulfide ores and the rest is in the form of silicates, sulfates, carbonates and oxides.

Production: The ores are extracted by either traditional mining or by leaching. Copper is manufactured in three steps.

Concentration of the ore ⇒ conversion of sulfides and other copper compounds to copper ⇒ purification of copper by electrolysis

Primary production of copper accounts for about 70% and the rest of the 30% come from recycling of secondary sources and scrap materials. Secondary sources of copper are alloys with high copper content.

World Scenario

World copper reserves reported to have assessed at 680 million tons in terms of copper content within them. Chile has the largest share of about 27.94% of world reserves, followed by Australia with 12.65%, Peru with 11.18%, USA with 5.73%, Mexico with 5.59%, China and Russia with 4.41% share each as reported by the Indian Bureau of Mines.

Mine production of copper largely remained stable at around 16 million tons during 2009 to 2011 as per the latest estimates of the US Geological Survey (USGS). On the other hand, world refined copper production is increasing but at a slow pace of 2-3% per annum between 2007 and 2013. According to the estimates of International Copper Study Group, refined copper output stood at 20.1 million tons in 2012 and is expected to move up to 21 million tons in 2013.

Table 1: World copper production (1000 tons)

	2009	2010	2011	2012
Chile	5394	5419	5260	5370
China	1070	1200	1310	1500
Peru	1276	1247	1240	1240
U.S.	1180	1110	1110	1150
Australia	854	870	958	970
Russia	676	703	713	720
Zambia	698	686	668	675
World	15500	15600	16100	17000

Source: USGS

Among various countries produced, Chile occupies the first place in case of mine production accounting for about 33% whereas China occupies the first place with about 27% in terms of refined copper production.

Use of refined copper is estimated at about 21.3 million tons as per the latest data available with the ICSG. The recent world trends in suggest that the use and production of refined copper are moving rather close.

Use of copper is the highest in Asian countries particularly in China. Europe accounts for about 20% followed by Americas with 16% of total use of copper in the world. Electricity industry is the largest using industry of copper in the world followed by construction and transport industries.

Table 2: Trends in world production and use of refined copper (1000 tons)

	Production	Use	Stocks
2008	18214	17888	1102
2009	18249	17894	1376
2010	18984	19129	1199
2011	19596	19697	1210
2012	20128	20386	1381
2013	20995	21267	1336

Source: ICSG

Domestic Scenario

Copper production in India is not enough to meet domestic consumption requirements and is supplemented with imports to a large extent. India is the 7^th largest producer of refined copper although it lags much behind in terms of mine production. Copper mine production in India is primarily concentrated in Madhya Pradesh, Rajasthan and Jharkhand states.

Primary copper is produced manly by three companies - Hindustan Copper Ltd (HCL), Sterlite Industries (India) Ltd and Hindalco Industries Ltd. HCL is the public sector company and it produces primary and refined copper using both indigenous and imported concentrates as well as scrap. Whereas Hindalco and Sterlite industries are private sector companies mostly rely on imported concentrates. Apart from these, Jhagadia Copper Ltd also produces copper but only from the secondary process.

Table 3: Trends in copper production in India (tons)

	Mine	Smelter	Refined
2010	37656	678500	661440
2011	38051	707171	677595
2012	38056	781500	705312
2013	38166	661500	600500
2014	39000	738500	732500

Source: Thomson Reuters as estimated in Feb 2014

Hindalco Copper Ltd has the largest annual capacity of 5 lakh tons of copper smelters followed Sterlite industries by with 4 lakh tons of copper smelters, HCL with 51.5 thousand tons and Jhagadia with 50 thousand tons.

Recycling of copper is increasing all over the world and a similar pattern is noted in India. However, the scrap market in India is highly unorganized and difficult to keep a track.

Per capita consumption of copper in India is much lower at 0.5 kg per annum than 3.3kg per annum in Russia, 5.4 kg per annum in China and about 9-10 kg per annum in developed countries.

Major industrial sectors using copper in India are electrical & telecom with 56% share followed by transport with 8%, construction with 7%, consumer durables with 7% and engineering goods with 6% share in the total use.

Major Markets

Spot markets: Mumbai, Delhi

Futures markets:

International: LME, Comex, SHFE

Domestic: MCX, NDEX, ACE, NMCE and ICEX.

External Trade

India’s external trade in copper is in a number of forms ranging from copper ore and concentrates to refined copper, copper & alloys, brass & bronzes, scrap, cement, copper, mattes, blister, bars, rods plates, etc.

Major export destinations: Liberia for ores & concentrates and China for refined copper

Major import sources: Ores & concentrates from Chile, Australia, Indonesia and Brazil.

Refined copper from Bhutan, Zambia, Ukraine and Chile.

Factors Influencing Prices

· Largely governed by the international markets and their price trends

· Growth and performance of major utilizing industries

· Government policies on trade both direct (restrictions) and indirect (taxes).