Adani’s Giant Copper Smelter Caught Up In Global Ore Shortage

India’s push to strengthen its metals supply chain is facing an early test as Gautam Adani’s new copper smelter struggles to secure enough raw material. The $1.2 billion facility in Gujarat, operated by Kutch Copper Ltd., began processing metal in June after several delays.

However, customs data shows that the plant is receiving only a fraction of the copper concentrate it needs to operate at full capacity. In the months that led to October, the unit imported about 147,000 tonnes of concentrate against an annual requirement of around 1.6 million tonnes. Hindalco Industries Ltd., a major competitor, imported more than 1 million tonnes during the same period.

This limited supply comes at a time when global mine disruptions, rising demand, and China’s expanding smelting footprint are tightening access to ore. Together, these pressures are shaping a complex environment for new entrants like Kutch Copper.

Why Is Ore Supply Tightening Worldwide?

The smelter’s early challenges reflect a broader global issue. Copper concentrate supply has tightened sharply in 2025 following multiple mine disruptions. Major producers, including Freeport-McMoRan Inc., Hudbay Minerals Inc., Ivanhoe Mines Ltd., and Chile’s state-owned company Codelco, have all faced interruptions this year. These disruptions have limited output at a time when global demand continues to rise, particularly from power, infrastructure and clean energy projects.

China’s rapid expansion of its smelting capacity has added another layer of stress. As Chinese plants compete aggressively for raw material, the global pool of available ore has shrunk. China’s expansion has hurt margins for smelters outside the country, pushing some of them to cut production.

The tightness in supply is clearly visible in treatment and refining charges. These fees, paid by miners to smelters, have fallen to record lows this year, signalling that smelters are accepting reduced margins simply to secure material. These charges are now at their weakest point in years, reflecting an industry willing to absorb financial strain to maintain output.

For Kutch Copper, entering the market during this period means competing with established global buyers while navigating an environment defined by shortages and volatile costs.

How Is the Shortage Affecting Kutch Copper’s Ramp Up

Kutch Copper’s plant has a design capacity of 500,000 tonnes per year and plans to double output to 1 million tonnes within four years. But ramping up requires consistent access to copper concentrate. With imports totalling only about 147,000 tonnes in ten months, operations remain far below full capacity.

Customs data shows limited volumes coming from major suppliers. BHP Group supplied 4,700 tonnes, while other shipments arrived from Glencore Plc and Hudbay. These quantities are comparatively small for a smelter of this scale.

The shortfall translates into higher operational costs. With global charges hitting record lows, new plants face pressure to accept tighter margins. Bloomberg Intelligence analyst Grant Sporre noted that Kutch Copper’s modern design should make it more efficient than older facilities. He said the plant could “ramp up at a loss” in the short term. He added that India could consider higher tariffs to protect domestic producers, describing it as “short-term pain for a longer-term gain.”

The slow start also demonstrates the challenges associated with building new metal processing capacity in a volatile global commodity environment. The plant’s performance is tied directly to global ore availability, which remains constrained.

What Does This Mean for India’s Metals Ambitions

India aims to expand its metals processing capabilities to support rising domestic demand. The copper market is central to that ambition, with usage growing across grid upgrades, renewable energy installations, construction, electric vehicles and electronics manufacturing.

However, domestic ore reserves are limited, and India depends heavily on imported concentrate. The supply constraints hitting Kutch Copper highlight this structural challenge. Even as new investments come in, the country remains vulnerable to external disruptions.

Kutch Copper’s experience underscores the gap between demand growth and processing capacity. While the company’s long-term plan includes doubling output, achieving these goals depends on securing ore at competitive prices in an increasingly tight global market.

The situation is also a reminder that India’s push for self-reliance in metals is constrained by global market dynamics. Even large-scale investments face challenges when supply chains are disrupted at the source.

Conclusion

Adani’s $1.2 billion copper smelter is entering the market at a time of global supply uncertainty, rising competition for raw materials and high demand across sectors. With imports far below operational requirements and mine disruptions continuing worldwide, the plant’s early phase offers a clear view of the pressures shaping the global copper industry.

India’s efforts to expand its metals capability will likely depend on how quickly global supply stabilises and whether new entrants can secure ore without compromising margins. As demand intensifies, will access to raw materials determine the pace of India’s copper growth?

Sources:

Bloomberg
MoneyControl