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Financial Express
17 August 2005
Birla Copper, the copper division of Hindalco
Industries, has concluded the ambitious expansion
of its copper smelter at Dahej in the Bharuch
district of Gujarat. Birla Copper enjoys a leadership
position in India and is among the fastest-growing
copper businesses in the world. The outcome
of the expansion is the doubling of the copper
smelter capacity to 5 lakh tonnes per annum.
The copper smelter at Dahej is now the world's
largest smelter at a single location. Commissioning
trials are under way and commercial production
is likely to start in a short time.
The focus of the expansion was on attaining
global cost competitiveness and the company
has invested close to Rs. 1200 crore on this
project. The increase in the smelter capacity
from 1,00,000 tpa in 1998 to 5,00,000 tpa, when
fully ramped up — a five-fold leap —
is a commendable feat. Mitsubishi Materials
Corporation, a Japanese company, has been the
technological supplier for the company's latest
expansion project.
In a letter to shareholders of the company,
Mr. Kumar Mangalam Birla, Chairman, Aditya Birla
Group wrote, "Doubling the copper smelter
capacity from 250,000 tpa to 500,000 tpa catapults
your company's plant to become the world's largest
single location world-scale copper smelter.
Importantly, it brings us closer to our goal
of being among the "top 15 per cent"
global, cost efficient copper makers. It also
enables us to sweat our assets optimally, enabling
us to leverage the Dahej jetty and infrastructural
facilities to the maximum."
Speaking to Financial Express, D Bhattacharya,
managing director of Hindalco Industries said,
"Towards attaining global competitiveness
and to reap benefits of significant deficit
in the Asian markets, the company has pursued
expansion of copper smelter to 5 lakh tpa. The
project implementation has completed and is
ahead of planned timelines. On successful stabilisation
of the expanded smelter, the company will be
amongst the top 10 global producers of copper
and will also be the largest custom smelter
in a single location anywhere in the world.
More importantly, it will also enable the company
to fully exploit the infrastructure potential
at Dahej."
The copper smelter also has technology support
from Outokumpu in Finland and Ausmelt in Australia.
It had expanded to 2.5 lakh tpa in February
2003 and subsequent doubling of capacity was
completed in July 2005. The copper complex in
Dahej has adopted the best available technology
for all its operations to help preserve the
environment.
The company's copper product range includes
copper cathodes and continuous cast copper rods.
It also produces precious metals, sulphuric
acid, phosphoric acid, di-ammonium phospate
(DAP) and other phosphotic fertilisers. The
company is ISO 9001,14001 and OSHAS 18001 certified
and registered on the London Metal Exchange
as a Grade A copper brand.
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Birla Copper plans on strengthening its presence
in exports while retaining its leadership in
the domestic market. Capitalising on its coastal
advantages and captive jetty, it intends entrenching
further into the profitable markets of South
East Asia and the Middle East. The huge demand-supply
gap in the region, as well as improved availability
of low cost metal from the expanded capacity,
will be exploited optimally.
Birla Copper's revenues climbed 33 per cent
to Rs 42.71 billion during 2004-05. Due to the
company's increasing penetration into high deficit
south east Asia and far eastern markets, total
exports grew 16 per cent to 1.12 lakh mt. Birla
Copper owns two copper mines in Australia —
Nifty in western Australia and Mount Gordon
in Queensland. Mount Gordon produced copper
concentrate meeting 12 per cent of Birla Copper's
requirement in fiscal 2005. Nifty and Mt. Gordon
mines will eventually contribute 20 per cent
of the copper concentrate requirement at Dahej.
Global copper consumption in 2005 is estimated
to grow at a moderate 2.4 per cent after a growth
of 8.8 per cent in 2004.
Birla Copper is well-poised to make a bigger
impact, on the global as well domestic scene.
The global copper industry witnessed a demand
growth of over 8.5 per cent in 2004, the strongest
since the 1980s. The growth was backed by rising
consumption from China and better industrial
production in the US, Europe and the Asian region.
Led by China, Asia may witness the strongest
growth in copper consumption even in 2005. Demand
from China is slated to grow in double digits
during 2005 mainly due to the need for large
investments in the country's power sector.
The sector, estimated to account for half of
China's total copper demand, is still underinvested
and the Chinese government's growth plans for
the sector will ensure continued strong demand
for copper. Demand from the rest of Asia also
remained firm in 2004 with the region emerging
as a hub for consumer durables and electronic
components (key copper consumers). Consumption
in 2005 is likely to slow down as exports of
these products fall. As a result experts feel
that overall Asian demand growth too may slow
down to 5-6 per cent for 2005 from 10 per cent
in 2004. Production in the region too has been
growing steadily with a growth of 10 per cent
during 2004. With supplies still lagging demand
and lack of additional smelting capacities in
the region, experts forecast a deficit of around
2-2.5 million tonnes in the Asian region. This
provides an enormous opportunity to Indian producers
for tapping the export potential in the coming
years, given the locational advantage they command
over the western producers.
Closer to home, the domestic demand outlook
remains stable. Jelly filled telecom cables
(JFTC), the largest copper consuming segment,
is likely to witness steady growth, after having
recovered from a sharp fall in recent years.
Coupled with continuing strong growth in other
key user segments such as winding wires, power
cables and the transfer sector, domestic demand
is expected to grow by around 4-5 per cent annually
over the next few years.
The outlook for domestic copper producers remains
optimistic given widening demand-supply gap
in Asia, which provides an opportunity for direct
exports. Deemed exports should also rise on
the back of better outlook for downstream product
exports and strong competitive advantage enjoyed
by the producers in India.
The company's road map for the future involves
exploring further acquisitions and leveraging
upon both greenfield and brownfield opportunities.
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