Adani’s billion-dollar copper play slows amid mining shortfall

Adani Enterprises Ltd. is likely to start processing the first copper concentrates or ore at its plant in the western Indian state of Gujarat in November and will build up slowly from there, according to people familiar with the matter who asked not to be named because the information was private.

The 500,000-ton-a-year Kutch smelter is part of a copper-producing complex that billionaire Adani aims to expand into the world’s biggest single-site custom processor of the metal and should go a long way in alleviating India’s reliance on imports of refined metal.

Adani kicked off copper refining earlier this year but will slowly build up smelting at the plant with the market currently experiencing its most acute shortfall of concentrate supply in decades. Alongside the Adani project, new smelters starting up in Indonesia and China this year have created a huge mismatch between the demand and the availability of mined ore.

Processing of mined copper into commodity-grade cathodes happens in two stages. First copper concentrate is smelted in a super-hot furnace to make 98-99% purity copper blister or anodes. That is then dissolved and electrolysis is used to make a cathode of 99.99% copper.

Copper ore supply has also been tight this year after the closure of a major mine in Panama and cuts at operations owned by Anglo American Plc. While the smelter expansion has made concentrates difficult to source it’s also added to a surplus of refined copper this year.

The pace of the ramp up of the Adani project and how it affects the market balance will be a topic of conversation as copper traders fly into London for LME Week. This is also when annual supply contract negotiations start between smelters and miners.

The first shipments of concentrates have already started heading to Gujarat, according to the people. the firm has secured supply contracts with Glencore Plc and Hudbay Minerals Inc for the smelter and is in talks with other parties as well, they said.

Glencore and Hudbay declined to comment. A spokesperson for Adani also declined to comment.

New smelters have an especially tough time in procuring ore, having to start up their new equipment using expensive and less available — low-impurity concentrates known in the industry as ‘clean’ material.