What has happened?
- India, a major exporter of refined copper till a few years ago, is set to become a net importer for the third consecutive year,
- As a plant in Tamil Nadu’s Thoothukudi continues to remain shut due to environmental concerns.
- The sharp fall in India’s exports has proven to be advantageous for neighbouring Pakistan,
- Which has stepped in to partially bridge the gap, especially to countries like China, according to trade data and exporters.
Shutting down of Vedanta plant
- India turning a net importer has been both on account of a sharp increase in imports and a contraction in exports.
- This is mainly due to shutting of a plant of Vedanta’s subsidiary Sterlite Copper, which had a production capacity of 4 lakh tonnes.
- Sterlite Copper’s copper smelter plant in Thoothukudi was shut down in May 2018 by the Tamil Nadu government after the state’s pollution control board made a recommendation to this effect.
- This followed violent protests by residents after environmental concerns that the plant posed a health hazard to those living in the area.
- “Domestic copper industry is operating at almost half of its capacity since the last two financial years due to closure of Vedanta Ltd’s 400 thousand tonnes copper smelter at Tuticorin,” said Care Ratings in an 18 February report.
- It added that India will continue to be a net importer of copper in FY21, pending the resumption of Vedanta’s copper smelting facility.
How much India import & export?
- The import of refined copper increased to 92,290 tonnes in 2018-19, from 44,245 tonnes in 2017-18,
- While exports declined to 47,917 tonnes in 2018-19 from 3.78 lakh tonnes in 2017-18.
- This resulted in net import of 44,373 tonnes in 2018-19 from net exports of 3,34,310 tonnes in 2017-18.
- In terms of value, India’s net exports of refined copper were more than $2 billion in 2017-18 before turning into a net importer beginning 2018-19.
Copper demand during pandemic
- Copper is a major input in many industries.
- The electrical and telecommunication industry had the largest share in copper consumption followed by transport, consumer durables, building and construction and engineering goods.
- After three consecutive months of sharp contraction in 2020-21, India’s copper imports have started rising again beginning September on account of an increase in demand from local manufacturing units.
Rise in prices
- A shortage in world refined copper stocks coupled with a strong demand from China has also seen global prices increasing.
- This has raised costs for local industries, which are dependent on copper for their production, leading to demands from some local industry bodies for reopening of the Sterlite plant.
- It is expected, the refined copper prices to average $6,500-6,800 per tonne in FY21 vs $5,923 in FY20.
How advantage to Pakistan?
- China was a major market for India’s refined copper exports a few years ago.
- However, with India ceding this space, Pakistan has stepped in to fill in this gap, albeit marginally.
- India’s share in China’s copper imports fell to less than 1% in 2019 from more than 5% in 2017.
- Pakistan’s share in China’s copper import basket increased to 6% from 0.1% during the same period.
- India had a geographical advantage vis-a-vis exports to China but this has now transferred to Pakistan.
- Latin American countries also export copper. But in their case, freight costs are higher.
Q) The upper Brahmaputra valley is known for which of the following resources?