India’s Copper Crunch Is Its Next Oil Shock

New Delhi’s complaint against Washington may sound technical: a fight at the World Trade Organisation over copper tariffs. But beneath the jargon lies a geopolitical fault line that could shape the future of India’s energy transition.

India doesn’t have much by way of copper supplies. It buys about 90 per cent of the copper it refines from the global market and manages to extract just 9-10 per cent of the raw metal locally. However, copper is the new oil and is needed in almost all industries which will power the future – from clean energy to construction to space travel.

The US is in the same predicament as India. It imports raw and semi finished copper and wants to expand refining. Hence its tariffs on those who export copper products to its shores and fast track trade deals with Latin American and African countries who will sell it raw copper for its new smelters.

In short, it wants to onshore copper refining and be the copper king. Unfortunately for Washington or New Delhi, Beijing saw the future, long before either nation woke up to the importance of the metal. As of date China accounts for about half of the world’s copper smelting and refining capacity according to commerce ministry officials.

“For India, the stakes are enormous. Copper is the metal that wires the clean economy. From power grids and electric vehicles to construction and advanced manufacturing, copper is the quiet backbone of the 21st century economy,” pointed out Avnish Mathur, an independent commodity market analyst.

To build world class melting and refining capacity which can rival China’s, India not only needs to corner a large share of the world's raw copper supplies but also markets where it can sell and that is where the spat with US over copper exports from India comes in.

While India can get over the loss of an estimated US$ 360 million worth of copper exports to the US, by diverting those products to European and Asian markets, where it really faces a supply bottleneck is in raw material supplies, as China and the US scour world markets to corner a larger than ever share of copper.

“This phase exposes India’s deepest strategic vulnerability: dependence on foreign copper at a time when the world is entering a copper crunch,” admitted top Indian Commerce Ministry officials.  Just as the oil shocks of the 1970s reshaped global politics, copper could be the mineral that tests India’s rise as a green industrial power.

Global Shortage In The Making 

Global copper demand, now around 26 million metric tonnes annually, is set to explode. The International Energy Agency projects the demand will rise to 33 million tonnes by 2035, while S&P Global predicts it will go beyond 50 million by 2050.

Every electric vehicle uses about four times as much copper as a conventional car. Solar farms, wind turbines, and battery storage systems similarly are all copper guzzlers.

However, supply is struggling to keep up. Ore grades are falling, new discoveries are scarce, and political opposition to mining is growing. Latin America, which holds the largest reserves, faces water shortages and community protests.

Africa, another key supplier, struggles with governance challenges. Nearly half of the world’s raw copper currently come from Chile, Peru and the Democratic Republic of Congo. China accounts for 7 per cent of global mined supplies, while the US, Indonesia and Russia each account for 5 per cent.

Export restrictions are tightening too. Indonesia has banned copper concentrate exports to force local processing. Panama recently shut down one of the world’s largest new mines after nationwide protests.

These moves disrupt global supply chains just as demand is surging. India figures nowhere in the list of top refiners or miners despite having been one of the earliest players in the global trade in copper sending ships across seas with copper ingots and finished products in the Mauryan period out of a port in Bengal called Tamralipti.

In other words, the copper that powers India’s green transition could depend on the goodwill of its strategic rivals who include China and now the US. India is particularly exposed. Domestic ore output is less than 4 million tonnes, while production of refined copper is stagnant at under 500,000 metric tonnes a year.

India’s Bottlenecks 

The problem for Indian planners is that by 2030, demand within India is expected to hit 3.3 million tonnes. By 2047, when India hopes to be a developed, net-zero economy, it could soar to nearly 10 million tonnes.

India has 12.2 million tonnes of copper resources, but only 18 per cent of that qualifies as reserves which are economically viable to mine. Auctions are slow,  clearances are cumbersome, and private investment has been scarce. Hindustan Copper Limited, the lone state-owned miner, operates at a modest scale. 

The Indian government is trying to address that by securing exploration rights for greenfield copper bearing land in Zambia, with the aim of converting them into full-fledged mining rights.

Back home, the Ministry of Mines has rolled out a new category of mineral concession, called the Exploration Licence, to entice players into reconnaissance and prospecting for critical and deep-seated minerals.

Private players, including JSW, are drawing up plans to expand mining operations. But the problem with new explorations is that the global average lead time for bringing a new mine into production stands at 17.9 years. Which means, India faces a huge challenge in ramping up copper output to meet its soaring demand, leave alone fuelling its ambitions of becoming a global refining major.

Smelting is, however, catching up somewhat. Adani’s massive Kutch Copper plant began operations last year, with another planned by 2029. But for now, midstream capacity remains extremely thin. Downstream, the picture is no better. Indian manufacturers are importing finished copper products — wires, pipes, tubes — rather than sourcing domestically, undercutting local value addition.

Recycling of metals, meanwhile, has always been a missed opportunity in India, despite its trading of recycling most produce including food. Scrap copper recovery is dominated by the informal sector, with unsafe processes and low yields. Formal, tech-driven recycling could provide a secondary supply stream, but has yet to scale up to meet the country’s needs.

This dependence creates three strategic risks for India — it can face supply squeezes whenever geopolitical winds blow against it. China’s dominance in refining gives Beijing the ability to squeeze global supply chains. Whenever relations between the two Asian neighbours deteriorate, India’s copper lifeline could be compromised.

The next risk is that of the rising trend of ‘resource nationalism’. Countries like Indonesia and Panama have shown they are willing to weaponise copper exports. India’s reliance on a handful of suppliers magnifies the risk. The last risk — of price volatility — India has been facing for some years now.In the last 5 years copper prices have gone up by 125 per cent and can be expected to fluctuate upwards as demand soars and supply bottlenecks get accentuated. 

The U.S. tariffs only underscore the point — copper is no longer just an industrial metal — it is a strategic commodity. India has to take steps to secure its supplies or remain dangerously exposed.

Old Friend Russia

If India wants to avoid a copper shock, it must move on three fronts — diversify imports, reform at home, and leverage diplomacy abroad. India is negotiating copper-specific trade treaties with Chile and Peru, the world’s top two producers but so are others. It should accelerate these talks and also look towards Africa and Australia, locking in long-term imports or purchases of mines.

Russia has been India’s time tested friend from the 1960s when it started selling MiG aircraft to India in the aftermath of China’s invasion and the post-1965 US-UK embargo on weapons transfer. Since then despite India’s liberalisation which drew it closer to the West, relations with Russia remained steady.

Partnership with Moscow in BRICS and Shanghai Cooperation Organisation has only added seasoning to the relationship.

Russia’s ore production and smelting capacity are considerable. It exported about US$ 5.24 billion worth of copper in 2024, with China being the largest single destination.

India should not only ramp up copper imports from Russia, it should go in for joint investments in mining and refining, creating a win-win situation for the two nations.

State-owned Khanij Bidesh India Ltd is already prowling abroad to acquire stakes in overseas copper mines. It should now be redirected towards Russia too with policy instructions to also explore joint ventures. Hindustan Copper, JSW and Adani group could be nudged to explore joint venture smelters with Russian players.

India should also pursue reciprocal deals with other mining giants such as Codelco or BHP to build smelters in India in exchange for Indian investment in their projects. At the same time India’s mining sector needs an urgent overhaul. Less red tape, faster clearances, better incentives, and increased private sector participation are a must for the sector to be far more dynamic and vibrant.

Smelting capacity must expand rapidly and this may perhaps be incentivised with fiscal sops. Recycling must be formalised and scaled through modern facilities, turning India’s growing mountain of e-waste into a resource.

Last, but not the least, India needs to set up stockpiles of all critical minerals including copper. This could be on the lines of our strategic petroleum reserve and should be stored in safe places, protected from possible missile strikes. The red metal may lack the glamour of lithium or the political drama of oil. But for India, it could decide whether the dream of becoming a green superpower is realised —or strangled by a wiring shortage.