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Time of India
17-07-2025
- Business
- Time of India
Explained: Why copper smelters are now paying to process ore—and what this means for India's clean energy future?
New Delhi: For the first time in decades, copper smelters are facing a situation where processing ore is becoming a loss-making business. Treatment and Refining Charges (TCRC), which smelters earn for converting copper concentrate into refined metal, have dropped to zero—or worse, turned negative. This means some smelters are now paying more for raw copper ore than the value they recover after refining it. This shift is not only rewriting global smelting economics but also raising serious questions for India's industrial strategy, especially at a time when domestic copper demand is climbing due to the rise of renewable energy, electric vehicles, and power grid expansion. What are TCRC and why do they matter? TCRC—or Treatment and Refining Charges—are what smelters charge for processing copper concentrate into refined metal. Historically, these charges have provided a stable revenue stream to offset the costs of running smelters. But when concentrate supply tightens and smelting capacity outpaces ore availability, competition drives down TCRC. This has now reached an unprecedented point where the charges are so low that smelters are losing money on each tonne processed. According to Rajib Maitra, Partner at Deloitte India, this sharp fall is due to three structural causes. First, mining disruptions in countries such as Panama, Peru, and the Democratic Republic of Congo have reduced global concentrate supply. Indonesia's ban on copper concentrate exports has made the market even tighter. Second, there has been a global decline in ore grades, making copper harder and more expensive to extract. And third, smelting capacity—particularly in China—is expanding faster than mine output, causing an imbalance in the global value chain. How China's strategy shaped the TCRC collapse? China's dominance in the copper smelting ecosystem is a key driver behind the collapse in TCRC. With over 44 percent of global refined copper capacity, China is not just a consumer but a commanding force in how global contracts are structured. Its state-owned enterprises (SOEs) have invested heavily in long-term offtake agreements and equity stakes in overseas copper mines. This gives Chinese smelters first access to concentrates and allows them to negotiate more favourable terms. China has also led the world in building new smelting capacity, often subsidised or supported by the state, leading to global oversupply in refining infrastructure without a corresponding increase in ore. As Maitra notes, this has left smaller and newer smelters—especially those without mining assets—struggling to stay afloat in a market where the economics no longer work. An industry expert, speaking anonymously, pointed out that China's grip is not commercial but strategic. 'The TCRC market is no longer market-driven—it's China-driven. Chinese SOEs control long-term contracts and have built capacity at a pace unmatched by mine supply. Their approach has been nationalist, not commercial. They locked up ore sources and now dictate global terms. New smelters outside China are entering a race with no oxygen.' Where does India stand in this shifting global equation? Indian smelters are somewhat insulated from this collapse, but only in the short term. Recent policy moves—such as the elimination of the 2.5 percent Basic Customs Duty on copper ore in the FY25 Budget and the removal of the duty on copper scrap in FY26—have reduced input costs for Indian refiners. In addition, domestic smelters have adopted modern technologies such as the Mitsubishi and NERIN processes. These allow for better metal recovery and more efficient use of by-products like gold, silver, and sulfuric acid. The latter is especially important in India, where sulfuric acid is a key input in the fertiliser sector and is subsidised. These by-products have helped smelters partially offset the losses from copper refining , but only those with integrated operations and advanced recovery techniques have managed to do so. Greenfield or standalone smelters without secure access to concentrates remain vulnerable to market volatility. What does the future look like for Indian copper refiners? The situation is unlikely to improve unless India addresses its structural dependence on imported concentrates. As Pallab Dutta, Partner – Metals and Mining at PwC India, notes, 'The collapse in global TCRC levels has exposed a structural vulnerability in India's copper refining landscape—its heavy reliance on imported concentrates.' He suggests two broad pathways to future resilience. One is to better organise the domestic copper scrap ecosystem, increasing recycling and reducing dependence on imported ore. The second is to accelerate copper mining within India, backed by policy reforms and faster project clearances. Without these interventions, the industry risks losing competitiveness as input costs continue to rise and margins remain squeezed. What can government policy do to stabilize the industry? Maitra believes a mix of trade, fiscal, and strategic policy tools can offer relief. One step could be reviewing Free Trade Agreements with regions like ASEAN, the UAE, and Japan, to prevent duty-free access for refined copper imports, which undercuts domestic smelters. Another is to consider raising the current five percent import duty on refined copper to give local refiners a buffer. He also suggests exploring the idea of a Strategic Copper Reserve, similar to India's Strategic Petroleum Reserve, to ensure a steady supply of copper concentrates in times of global disruption. Government support in R&D for improving by-product recovery could also help improve the economics of copper refining. Why this matters now more than ever? India's energy transition is copper-intensive. From power grids and electric vehicles to solar panels and industrial wiring, copper is critical to meeting clean energy goals. As demand rises, the ability to refine copper domestically becomes a national economic and strategic priority. If smelters continue to operate at a loss or scale down due to unviable margins, India could end up importing more refined copper at a higher cost. That could have a cascading effect on downstream industries, energy pricing, and manufacturing competitiveness. Companies are now looking to secure long-term concentrate supply from copper-rich nations like Chile, Peru, and Australia to reduce dependence on volatile spot markets. Maximising the recovery of rare by-products such as molybdenum, selenium, tellurium, and nickel is also seen as a key lever to maintain profitability. There is also growing focus on enhancing copper recycling and investing in secondary refining, which can offer more stable economics and environmental benefits. The road ahead The TCRC collapse is not just a market disruption; it is a signal of deeper structural shifts in the global copper supply chain. For India, the response will need to go beyond import duty tweaks and efficiency upgrades. It will require a national strategy that looks at resource security, trade policy, and supply chain resilience in an integrated manner. If the country is serious about becoming a clean energy leader, it must ensure that its copper industry is not priced out of its own future.
Time of India
16-06-2025
- Business
- Time of India
India must address import dependence in Cobalt supply to boost security
The border may have cooled, but a more enduring battle brews far from the frontlines—deep inside supply chains and smelting plants. The brief but tense India-Pakistan standoff, where air defence systems were activated and electronic surveillance was ramped up, exposed an uncomfortable truth: India's reliance on imports to meet its demand for Cobalt that powers some of our advanced weapon systems. From precision missiles to stealth aircraft and smart naval platforms, cobalt is used in bulk. But for now, India imports almost all of it, mostly from China. "Cobalt is not just a metal; it's a national security enabler," says Vinayak Singal, Assistant Vice President at Lohum. "India currently imports cobalt from China to manufacture high-performance superalloys used in our defence technologies. This overreliance makes us acutely vulnerable." The strategic edge beneath the surface During the recent Indo-Pak conflict, the readiness of Indian forces, especially air and missile defence, was on full display. Behind that hardware lie systems powered by cobalt-rich alloys and magnets. Hypersonic engines, UAVs, radar domes, and submarine propulsion all depend on cobalt for heat resistance, magnetic strength, and durability. According to the 2024 Cobalt Market Report, global defence-led demand for cobalt is on the rise. For India, aiming to indigenise its platforms, be it LCA Tejas or long-endurance drones, continued cobalt dependence is a major issue. China's grip on the cobalt supply chain Nearly 80% of the world's cobalt is refined by China. Add to this its control over 15 of the largest copper-cobalt mines in the Democratic Republic of Congo, and the picture becomes even starker. China has already demonstrated its willingness to weaponise supply chains—tightening exports of gallium and germanium in 2023. "Given cobalt's use in hypersonic cruise missiles, radar systems, and battlefield communication tools, any disruption in supply could delay critical defence programs and undermine India's national security," says Rajib Maitra, Partner at Deloitte India. India's strategic push: Building domestic capability A Vedanta Limited spokesperson acknowledged the urgency of the situation. 'India's 100% cobalt import reliance is a strategic vulnerability. While domestic exploration is essential long-term, immediate gains lie in refining, recycling, and smart sourcing,' the spokesperson said. Vedanta has committed to scaling up cobalt production from 1ktpa to 6ktpa at its Konkola Copper Mines in Zambia. In parallel, it is building refining capacity under its Vedanta NICO project in India. 'Recycling and recovery are a major opportunity for India,' the spokesperson noted. 'Incentivizing by-product cobalt recovery from tailings offers another pragmatic avenue. Simultaneously, investing in global upstream assets will bolster India's supply security.' The focus must be on refining 'While it's true that India is fully import dependent for cobalt like some of the other critical minerals, there is one difference,' says Nishant Nishchal, Partner at Kearney. 'Only one part of the value chain is constrained. For cobalt, it's the refining that is concentrated in China. That's where India needs to focus.' Nishchal adds that while urban mining shows long-term promise, defence-grade cobalt purity levels can only be assured through proper refining infrastructure. 'The choice is clear—India must develop its refining ecosystem,' he says. The urban mining opportunity and its limits Recycling, if scaled and streamlined, could be a game-changer in reducing India's cobalt vulnerability. As electric vehicles and battery-based systems grow in volume, so will the availability of end-of-life lithium-ion batteries containing cobalt. With the right mix of technology, policy support, and public-private partnerships, recycling could help India build a domestic source of cobalt. Not only would this lower dependency on imports, but it would also support a circular economy that aligns with India's sustainability and strategic autonomy goals. India produced 1.75 million tonnes of e-waste in FY24. Lithium-ion batteries make up a growing portion of this, containing recyclable cobalt. But only 43% of this e-waste is processed, and fewer facilities can meet the high-purity requirements needed for defence applications. Indian startups are testing advanced recycling processes using low-heat, high-recovery methods that isolate cobalt through magnetism and solubility. But in the absence of government incentives, collection infrastructure, and legal mandates, these innovations struggle to scale. Policy gaps that undermine sovereignty Given Cobalt's strategic value, India's mining and waste policies must cover cobalt recovery and mine closure plans should include tailings assessment for critical minerals. Public procurement for defence systems should also mandate domestic cobalt sourcing. India's recent military posturing during the Indo-Pak tensions showed operational strength but true strategic autonomy lies deeper — in resource control. As global conflicts become supply-chain wars, minerals like cobalt are the new oil. "Cobalt is the Achilles' heel of modern defence systems. The sooner we localize its supply, the better prepared we are for future conflicts," says Lohum's Vinayak Singal. India is making moves through its ₹7,000 crore National Critical Minerals Mission and by directing PSUs like KABIL to scout global mining assets. But to truly de-risk its defence ambitions, India must build refining capacity at home, mandate cobalt recovery across sectors, and strike long-term mineral diplomacy deals.
Time of India
16-06-2025
- Business
- Time of India
India must address import dependence in Cobalt supply to boost security
New Delhi: The border may have cooled, but a more enduring battle brews far from the frontlines—deep inside supply chains and smelting plants. The brief but tense India-Pakistan standoff, where air defence systems were activated and electronic surveillance was ramped up, exposed an uncomfortable truth: India's reliance on imports to meet its demand for Cobalt that powers some of our advanced weapon systems. From precision missiles to stealth aircraft and smart naval platforms, cobalt is used in bulk. But for now, India imports almost all of it, mostly from China. "Cobalt is not just a metal; it's a national security enabler," says Vinayak Singal, Assistant Vice President at Lohum. "India currently imports cobalt from China to manufacture high-performance superalloys used in our defence technologies. This overreliance makes us acutely vulnerable." The strategic edge beneath the surface During the recent Indo-Pak conflict, the readiness of Indian forces, especially air and missile defence, was on full display. Behind that hardware lie systems powered by cobalt-rich alloys and magnets. Hypersonic engines, UAVs, radar domes, and submarine propulsion all depend on cobalt for heat resistance, magnetic strength, and durability. According to the 2024 Cobalt Market Report, global defence-led demand for cobalt is on the rise. For India, aiming to indigenise its platforms, be it LCA Tejas or long-endurance drones, continued cobalt dependence is a major issue. China's grip on the cobalt supply chain Nearly 80% of the world's cobalt is refined by China. Add to this its control over 15 of the largest copper-cobalt mines in the Democratic Republic of Congo, and the picture becomes even starker. China has already demonstrated its willingness to weaponise supply chains—tightening exports of gallium and germanium in 2023. "Given cobalt's use in hypersonic cruise missiles, radar systems, and battlefield communication tools, any disruption in supply could delay critical defence programs and undermine India's national security," says Rajib Maitra, Partner at Deloitte India. India's strategic push: Building domestic capability A Vedanta Limited spokesperson acknowledged the urgency of the situation. 'India's 100% cobalt import reliance is a strategic vulnerability. While domestic exploration is essential long-term, immediate gains lie in refining, recycling, and smart sourcing,' the spokesperson said. Vedanta has committed to scaling up cobalt production from 1ktpa to 6ktpa at its Konkola Copper Mines in Zambia. In parallel, it is building refining capacity under its Vedanta NICO project in India. 'Recycling and recovery are a major opportunity for India,' the spokesperson noted. 'Incentivizing by-product cobalt recovery from tailings offers another pragmatic avenue. Simultaneously, investing in global upstream assets will bolster India's supply security.' The focus must be on refining 'While it's true that India is fully import dependent for cobalt like some of the other critical minerals, there is one difference,' says Nishant Nishchal, Partner at Kearney. 'Only one part of the value chain is constrained. For cobalt, it's the refining that is concentrated in China. That's where India needs to focus.' Nishchal adds that while urban mining shows long-term promise, defence-grade cobalt purity levels can only be assured through proper refining infrastructure. 'The choice is clear—India must develop its refining ecosystem,' he says. The urban mining opportunity and its limits Recycling, if scaled and streamlined, could be a game-changer in reducing India's cobalt vulnerability. As electric vehicles and battery-based systems grow in volume, so will the availability of end-of-life lithium-ion batteries containing cobalt. With the right mix of technology, policy support, and public-private partnerships, recycling could help India build a domestic source of cobalt. Not only would this lower dependency on imports, but it would also support a circular economy that aligns with India's sustainability and strategic autonomy goals. India produced 1.75 million tonnes of e-waste in FY24. Lithium-ion batteries make up a growing portion of this, containing recyclable cobalt. But only 43% of this e-waste is processed, and fewer facilities can meet the high-purity requirements needed for defence applications. Indian startups are testing advanced recycling processes using low-heat, high-recovery methods that isolate cobalt through magnetism and solubility. But in the absence of government incentives, collection infrastructure, and legal mandates, these innovations struggle to scale. Policy gaps that undermine sovereignty Given Cobalt's strategic value, India's mining and waste policies must cover cobalt recovery and mine closure plans should include tailings assessment for critical minerals. Public procurement for defence systems should also mandate domestic cobalt sourcing. India's recent military posturing during the Indo-Pak tensions showed operational strength but true strategic autonomy lies deeper — in resource control. As global conflicts become supply-chain wars, minerals like cobalt are the new oil. "Cobalt is the Achilles' heel of modern defence systems. The sooner we localize its supply, the better prepared we are for future conflicts," says Lohum's Vinayak Singal. India is making moves through its ₹7,000 crore National Critical Minerals Mission and by directing PSUs like KABIL to scout global mining assets. But to truly de-risk its defence ambitions, India must build refining capacity at home, mandate cobalt recovery across sectors, and strike long-term mineral diplomacy deals.
