Is Copper In A Supercycle

Copper is in a cycle or a super cycle you may call it.

We have this cycle which is basically led by AI which is led by power transmission and distribution which is happening because of electrification of vehicles EV vehicles are coming out of,000 kgs of copper or you could get around 15 kgs 1.5% of good copper but now it’s fallen down to 0.6%. biggest uh economic winner Assad is usually the miner. India has eventually become a importer of copper whereas we should have an exporter. Uh thank you so much Amit sir for doing this. Uh we came across your profile on Twitter and we were very excited to see you engaging with our Twitter account and you following us. You have been one of the few sor folks in the industry who we also love to hear your thoughts about and you’ve been running fintech capital for a while career and when this opportunity came to talk to you about copper I was really excited so thank you so much for doing this thank you so much for having me always a pleasure to read all your posts at zeroda and uh happy to be here to interact uh on this on this topic uh hope we can bring out some detail details about this copper cycle. The reason I think we chose copper was because whenever we did our research, right, whenever we picked up any topic, a lot of the news that we got was around the you know energy transition and a lot of the news also came around AI and copper was at the center of it. We’ve also covered copper in our daily brief articles as well at depth. So copper was a common theme that came throughout which begged the question that okay copper is in a cycle or a super cycle you may call it but is we have seen copper go through the cycle. Uh if when I was going doing my research it mentioned there were four times earlier it was I guess the 200911 stimulus rally because of China that happened and we’ve seen copper rallies come in but all of them also had 50% draw downs. So my read of the situation is key not everything goes to the moon. Everything that goes up should come down. But is this time different or in a sense is this truly a super cycle where the price trend is in a very structural bullish phase or is it again one of those things where things go up and things come down. So I think uh you’re right to be skeptical uh you know how how the rally unfolds eventually. you know commodity super cycles uh in the past also have gone boom and bust that has been the pattern but the reasons can differ a lot uh so for example uh you talked about the 2000s one there have been rallies in the past also but let’s concentrate in the last 25 years uh because that’s most recent and most panic has happened because of the structural droughts so first uh you know it happened in the China with the China industrialization from like 2000 early 2000s till about

20078. Uh so that was a completely demand shock uh because you know China was going all in with the urbanization uh there was a huge grid bailout buildout which was happening uh and there was a property boom which was happening. So you know copper I think went from 3,000 to about 6,500 or so almost doubled uh in that phase of about 5 years and then the global financial crisis happened also. Uh you know the intensity of that copper use sort of peaked out earlier. Uh also you know a lot of supply came in came on board. So you had mines of uh copper mines in Chile or Peru which came across. Uh so that was one uh then it corrected obviously uh 50%. Uh then you had this QE boom uh in 2009 till about 201213 when US had QE1 to uh there was a QE super cycle. Uh again that was a sort of a demand drop. uh that was a coordinated fiscal plus credit move by the central banks but that was followed by a lot of uh capex also which happened in the mining coffee mines over there. So there was a massive mining c apex which followed and again there was a sort of a correction a lot of that correction was that basically over supply came a lot of mines came up so the supply response was quite persistent at that point of time so you had another correction third was after covid when again you had because of the covid everything was shut down and you had a very strong fiscal transfers which were happening people were companies were getting zero loans on 0% and obviously after uh COVID uh lockdowns opened up there was a demand spike. Uh so when that that demand spike happened again you know copper went up but then there was a China property slowdown you know one of the premier players in China Granada they they sort of collapsed so there was a China property slowdown there was a tightening liquidity because inflation went through the roof so that sort of killed the marginal demand and again we saw a little bit of correction 30% correction almost in copper and then now we have this cycle where which is basically led by AI which is led by power transmission and distribution which is happening because of electrification of vehicles EV vehicles are coming. So in that sense uh you know uh this cycle is still playing out. So the copper cycle is also playing out. How far it goes it looks like you know next 3 to 5 years it should stay. When it’s going to stop and whether we are going to have another 50% draw down that uh is very difficult to predict at this point of time because right now the cycle is up. The copper prices are also up. Uh so right now the tailwinds are there. when this signals get distorted that we have to watch out in the next uh two three years.

Fair enough. I think throughout you know the thesis that you shared there was always a time where you mentioned that supply eventually caught up the supply responsiveness all the price was enough for the prices to eventually eventually mute down. Now let’s just talk about supply only right when I was researching I found that you know the org grades have fallen a lot. So there was this stat where I was reading key pelle or grade was let’s say 1.5% which basically means out of thousand kgs of copper ore you could get around 15 kgs 1.5% uh of good copper but now it’s fallen down to 0.6%. Because even eventually when you’re mining ore, now I’m getting to the specifics of it, the easiest copper to mine is the one on the surface and the further you go underground, the more difficult it gets to mine and also the incremental copper you get out of it is also very less. I’m assuming this is a structural thing and the capacity actually catching up. I’m not sure that will happen because again I also read that copper mines usually take years to come online and we’ve had our fair share of uh copper plants shutting down over past couple of years 2018 sterite being one of the biggest cases right do you think whatever happened you know in the past three uh cycles where supply eventually caught up it’s going to happen this time soon what’s your take on that because from whatever little I read I don’t think supply would be responsive enough so supply will take time to catch Because you know a lot of the mines are either very old so they are already providing the I don’t know already providing the osu or they are in the construction phase. Now one needs to understand that copper mine overnight copper mine can take anywhere between 5 to 15 years to basically start producing the output and after that also you know whether it is lower grade higher grade what is the environmental uh impact of that uh that we needs to understand so I mean just to get to very very very basics like what does a 1.5% grade means or now what does a.5% grade mean so that means simply So the these are grades of uh copper which comes out. So that means if you are mining 1.5% grade you are getting more output out of it. But if you are doing a 5% grade that means you are basically for the same copper output you are getting 3x more material. So you’re crushing more rock energy, you’re processing more water, uh you have to manage more waste material etc. So in that sense you know a lot of these mining uh mining places which are coming they they are taking time to come back you know India has just started in the last couple of years to actually start mining uh you know there has been adanis JSWs Hindalos of the world which are doing it but uh can it distort the copper market? Uh I don’t think it will happen very soon. uh but it also depends on you know how the AI works. If AI really goes uh through a sort of a linear uh move in the next 3 years 5 years then it could be a case that we are short of copper but uh till till that you know I think it should be okay. It should be okay in that sense. So because you know adding new copper supplier takes time you know you have to discover lowquality deposits you have to process that materials there has to be capital deployed uh you have to survive all the political and the environmental risk you know these days political risk are too high I’m I’m not talking about like local government or uh national government even geopolitical risk is too high and then you know companies are using countries are actually using geopolitics to basically stop the supply of all the material raw materials to their own country. So it’s happening. Uh so my sense is that you know copper sort of is currently oscillating between surplus and scarcity but I don’t think till you know uh AI is on a sort of a linear path uh we’ll have we are okay but uh at some point of time we could be shortage of copper. There’s one more thing that I read that you know whenever there’s a shortage of something we also end up eventually finding substitutes of it and I was reading how you know aluminium is another metal although both of them have very different conductivity and very different properties but do you see that angle coming in which sort of naturally caps the demand growth for copper should the price of copper actually skyrocket it reached 13,000 and now obviously it’s relatively lower than the all-time high but should the price continue to go Do you see over the horizon that substitution also eventually becomes a natural price cap for copper? See it always happen. If you actually read history of economics over the last 50 years, you’ll always realize that you know history suggests that markets do eventually find workarounds when scarcity becomes very severe. It has happened with every major industrial material. uh when the oil shocks hit in the 1970s, you know, when we had this Iraq war and all, economies became dramatically more energy efficient. Uh when the fiber optics technology matured and there’s all the aluminum and the optical cables displaced uh you know portions of traditional copper demand because the demand for telecom was so high in the early 2000s, we changed uh similarly when the platinum prices spiked in the early 2010s. uh you know a lot of automakers uh engineered lower loadings in the converters uh so that they don’t have to use platinum so you know humans are smart in that sense people in R&D are smart enough so industrial systems adapt to the price pressures because high prices are essentially information signals that tells everyone the in the ecosystem that this has now become economically irrational and we need to find an alternative. So can we find alternatives of copper? Well, copper, you know, is a very unique metal in the sense that it offers very exceptional combination of there is an electrical conductivity, thermal conductivity and durability and also recyclability. That’s why you know it’s used so much primarily in the electrification phase or the power distribution and transmission phase which we are having. So there are substitutes aluminum is obviously one of them which is the most obvious replacement and candidate. uh it has already displaced copper in certain transmission lines and power applications because it’s cheaper, it’s lighter. Uh but then it’s also less conductive. So you cannot use every use it everywhere in EVs and data centers also some somewhere you know we have started using aluminium but uh you know whether there are other very efficient uh substitutes uh the answer at this point of time is no but you never know you know India I mean scientists are smart enough to find a another alternative if it goes out of hand price goes out of I think that gives a good macro picture to the copper story and I want to actually get into the business end of things and that primarily involves you know understanding the value chain and my question to you is very simple but I know the answer would be dense when you know copper prices go from $6,000 to $13,000 throughout the the value chain the economics of value chain who captures the most value is it the miner which is getting copper uh out of the ground is it the refiner who are working on those refining margins is it the end end user industry who’s maybe eventually able to pass on the price uh to the end consumer in this whole value chain again as the copper moves through it who makes more money should the prices go up and should the prices go down and who gets squeezed the most maybe this way I’ll be able to better understand how can I eventually play the copper theme as well which is a separate question but yeah maybe let’s start from here see when the copper prices rises the biggest economic winner as usually the minor copper the upstream miner or the because they are the low cost producers because you know the most of the mining cost labor energy sustaining capex they do not rise as fast as the copper price. So copper price will rise faster than you know other things all these things will sort of are eventually a line item in in the balance sheet. So the incremental price gains largely flow straight into the operating margins and the free cash flows of these company. Miner producing copper at let’s say $4,500 or $6,000 suddenly see enormous margin expansion when copper has doubled to 13,000 currently or 14,000. Now under that also there are two parts to it you know one is the refiner one is the smelter. So their economics are also driven large largely by the what we call as treatment and refining charges DCRC’s which we call rather than just outright copper prices. When there are tight supply which often coincide with higher prices this TCRC’s usually fall copper prices supply tight f TCRC ratio f that means smelters can actually get squeezed in a copper bull market because miners gain bargaining power miners bargaining smelters There are multiple ways to play it. Uh there are wires and cables. You can have electrical equipments. You can even have component manufacturers. But these are mostly pass through businesses. You know copper is treated uh in the whole their value chain. Copper is just a raw material input that gets passed to customers via usually via fixed formula or inventory adjustments. So if the copper prices spike too quickly then working capital requirements can increase very dramatically and very quickly and margins can temporarily compress if the demand is not there. If the demand is there then margins can may not compress but volume expansion will be there. So anyone with a good hedging system, strong hedging system and a good working capital cycle, they will benefit but they do not make money because uh the copper prices are rising because they are passing it on. It’s like just to give a example of another industry, it it’s what happens with paints. Uh when the crude prices spikes, Asian paints let’s say pass on those prices to uh pass on that price hike to the dealers. And similarly, if the crude prices goes down, they also pass passes on that price deduction to the dealers. Similarly things happen here in the downstream wires and cables electrical equipments component manufacturers uh the prices of copper gets passed on. So it’s a complete pass through. Now how much is the demand that will decide whether the margins get compressed or margins go up. So in most of the cases uh if certain companies then play on the substitution parts copper can we provide aluminium that those things can happen but the usually the real squeeze follows out on uh the manufacturers with fixed price contracts or companies which are holding very low cost inventory. So that’s why you’re seeing this change from uh unorganized to organized uh players or the listed players you can say because the unorganized players they cannot hold so much of inventory. They they don’t have the working capital to hold that much of inventory because the prices have gone up. So that’s why uh the downstream they are getting a little bit benefited because demand is very strong because of AI because of electrification etc. So if I were to wrap it up again the biggest beneficiaries will be mining companies because they have fixed fixed costs and the sudden spike actually improves their margin a lot giving that operating leverage and all of that benefits come there. the TCRC margins get compressed solely because the supply coming from these miners is very low but eventually smelters are still the same. So the same set of smelters and refiners are fighting for that lower supply eventually squeezing the margins and I guess I read somewhere where few of these Chinese smelters were actually agreed to do smelting at $0 per ton in December at the peak of that uh spike. And the third downstream is where obviously we see the unorganized to organized shift also happening because they aren’t able to you know take all this inventory and mostly it’s a timing of cash flow problem where eventually the pass on happens but how well is a company able to do is a function of their hedging strategies and is there even brand at play here because I’d like to believe a brand which has enough negotiation power over its distribution channel will be able to pass it on much effectively and also So again I read it somewhere I guess it was the paint industry only where when the crude prices go down doesn’t necessarily mean that the prices of paints will also go down they might remain the same hence expanding the gross margins a bit does that happen or is that a right frame of thinking for even copper downstream industries mostly it’s the same uh you know line of thinking that copper prices are basically the pass through both both in the up cycle and in the down cycle. Uh but uh you know how much working capital you can squeeze out of it that really depends on your brand. Uh so a organized player with the proper taxing and accounting and the working capital limits will be able to do more business more volumes in a in an upcycle than a unorganized players who is usually squeezed by the working capital constraints. Uh you talked about the Chinese meters doing on $0. Uh I mean uh that’s an extraordinary signal because it effectively means that the copper concentrate market has completely flipped in the favor of miners in normal conditions. What will happen? Uh the smelters are paid TCRC’s for converting that concentrate into refined copper. So those are the fees are the economic foundation of a smelting industries. But when this benchmark TCRC’s collapse towards zero, it means that the base or the concentrator becomes so scarce that smelters are aggressively just to secure the feed stock. So even if it is processing it generates a little or no margin, uh it it is okay and China has sort of mastered this activity of selling at no profit no loss or selling it slightly loss just to keep the factories running. So that’s what we are seeing we have seen in December also. So at the same time you know in the downstream what you are talking about is absolutely right people with the brand and people with the larger working capital market they are able to tap much better. Again talking a bit more about you know before we get into the Indian players uh talking about miners where this is a point where they have all this leverage we I also read up you know there was a possibility of a merger between Glenor and Tinto which are one of the largest copper mines in the world so I’m assuming there’s some sort of consolidation happening on the minor end of things so what’s your take on that like how is it why is it happening in the first place even though it fell off the deal didn’t go through but why is it happening Aren’t these mines standalone profitable enough to sustain their operations or is it part of the larger strategy where all these assets are coming together to have much higher negotiation power over uh other players in the value chain? See uh a lot of these uh mergers have been explored in the past uh but they haven’t happened. We had this I think Glenor and Riotinto you know they started doing the merger test but the valuations did not match. A few years ago I think also uh Riotto and BHP uh I think they were planning more but they haven’t gone through a lot of this is because they are present in so many geography so you know everything needs to come together from a legal point of view from the politics point of view uh the the political systems needs to be satisfied that uh you know this copper going exporting what we are exporting that is in national interest etc. So what we have seen is that somehow these deals have fell through and you know every copper mine uh you know has sort of uh uh its own limitations of you know how much it can do without hurting the environment. So if it starts hurting the environment then you have these uh uh you know legal cases which goes on that happened a lot with Glenor. Uh so in that sense uh you know uh what we have seen is that uh the copper story is real but it does not really fully trust miners to convert that macro story into sort of clean shareholder returns. Uh so BHP has you know done repeated attempts uh to actually merge. uh but uh for somehow whether it is valuations or whether it is government governance disagreements uh that logic hasn’t uh you know so that does not mean they are not doing well. Uh all their management teams very strongly believe that copper supply is valuable enough to justify their uh current presence. Uh but when it comes to merging them it is it has not worked. But uh you know on the on on an individual business they’re doing okay from a purely economic sense tell me if I understand it correctly it makes all the sense for them to capture most value but the business of copper is such and it’s so dirty especially you know when the whole world is moving towards ESG and all uh it makes very little it it gets very difficult for them to actually sustainably end up doing so is my read on this uh apt environment governance because again this is a segue for me to even talk about you know uh the sterite plant right uh there was a time when it was supplying 90% of India’s domestic demand and after the environmental concerns it got shut down and no matter how much how strong the economic incentive is for us to restart as a country because we are now a net importer of copper earlier we were a net exporter of copper things still aren’t turning the way so is this you know dirty side of copper mining so so strong that no matter how much economic incentives exist we we are just not able to find a way out of it worldwide any industry which works there has to be some sort of uh environmental impact it is just impossible not to have that environmental impact whether that impact is within the limits or not that is the question if it’s not within the limits then you know uh the local authorities or the government has to take action to bring it uh within the limits because it will impact the lives and the livelihoods of a lot of people which are sort of uh staying it around. uh now we can talk about what happened with sterite and all but in general you know most of the miners uh globally I’m talking about not specifically India but globally they have been uh subjected to very stringent environmental norms and it’s very difficult uh because the legal system is so strong uh you know it becomes very difficult for them to break the laws very easily or get away with breaking the laws very easily. So they tend to fall on the right side of uh right side of things. There will be always incidents when the industrialization is happening but uh you know that’s a byproduct of uh the environmental damage the byproduct of industrialization. I think till with it’s all in the limit it’s all good but if it goes out of limit then one has to take a concrete action. uh and then we can you know touch about uh if you want we can go into detail about the sterite and all before that um one one trend that I’ve observed is I don’t know whether it’s comparable is that of you know steel uh after CBAM got introduced on steel eventually everyone started talking about you know green steel and you know there’s a premium attached to green steel but it still is in the interest of the industry to move towards it so that again steel consumption continues and steel production continues from at least India’s end. Is there a future where you know because eventually CBAM will also have copper come in by 2030 if I understand it correctly. Uh is there a future where you know copper actually becomes a much greener version of fit is today and you know all these bottlenecks that exist because of environmental concerns stop being a problem and supply actually becomes much more responsive and not contingent on these. Is that a possibility or do you have any say on that? No, see CBAM phase one has already started in January uh January 2026 first January. Uh the copper isn’t in it but the EU has proposed extending CBA to almost like 180 downstream products from

Uh including products of copper wires and cables. uh so the implications for Indian smelters uh Indian downstream exporters uh is quite significant uh especially because the impact will not stop at smelters you know it will extend to wires and cables it will you know extend to transformers electric equipments so all these you know beneficiaries of uh expansion in electrification of vehicles or data centers or AI related themes uh they will all get impacted because of CBA. Now how effectively they are able to do it uh you know how effectively they are able to convert this carbon intensity into a trade cost and once the these products falls within the scope will European buyers will buy them at a certain price and a certain quality that we need to see over the next two to four years. But I know for the fact that uh you know uh a lot of lot of the companies in the value chain they’re already working towards having a green copper wire or you know green copper equipments being made. Uh so I track a company called USA Martin. Uh they make these elevator ropes and they they are already working towards a green copper initiative and making their wire ropes green with green carbons because they are a big exporter into the European countries. Uh so it’s not that you know it’s it has come as a surprise it was in the pipeline. uh and even the downstream exporters like polycaps, ki industries, RR cables, they all needs to improve their carbon footprint of the copper inside their products. Uh just to for their efficiency and then only they can you know push these products into the supply chain. Uh so that will happen. It’s a process over over the next four years. Companies are already working towards it. uh and hopefully uh the whole picture will you know come through in the next few years. uh you know talking about you just the Indian landscape now you’ve already named a few downstream companies let’s talk about the upstream companies what does the listed universe looks like if I’m talking about you know having exposure to miners or through smelters and refiners what does that look like from an Indian context

so uh so the largest player is obviously Hindustan copper which you know mines copper but uh you know it being a PSU it has already it’s a most cleanest pure play copper beta you know stock which I can talk so but it’s also mostly cyclical and operationally constrained it’s revenues and valuations are obviously directly to uh related to the copper mining and the concentrate economics so when the copper rises meaningfully like it has uh over the past few few quarters then the leverage to earnings can also be dramatic and which has happened with but the problem with copper operate that it’s a relatively small production growth is usually slow and being a PSU the operational execution is sometimes inconsistent. Uh so it gives you the purest copper sensitivity but not necessarily the highest quality business as such. I personally think even though this is not a forum but I personally think that the market cap to valuation ratios is just out of the whack. Uh so I I would not like to play it through the cleanest pure copper beta uh kind of a play. Uh the next is a little bit of a vidanta. Vidanta obviously the sterlite plant is down but they’re doing some copper mining from Zambia. They they recently started last year one project in Saudi. Uh so there you get some exposure of uh of copper. uh Hindalco also is into mining now even though it’s not a direct copper proxy uh it’s mostly aluminium via novelis where they do the upstream aluminium operations and then there we have Adani enterprises who has a very big infrastructure conglomerate uh which is also got into copper mining and they can also do it over the next 3 to 5 years uh and then then you have the downstream ones where polycaps If you know cables, RM cables all all these are sort of beneficiary of that. So uh like how does an Indian retail investor play the copper theme the best way not pointing in any direction is it domestically internationally through commodities through futures I don’t know I don’t know what does what does a copper play portfolio you know the satellite portfolio for copper scene look like for an Indian retail investor so I think uh it has to be a combination of a little bit of players miners who are going to export in the future from India. So your hind hindos and the vidantas of the world they they will be exporting out of India. So the these are one players and the second is then in the downstream you can have a look at all these cable and wire players which benefit from the increase in the demand because of the electrification and because of the AI theme and all. So I think I’ll have a probably a combination if I have to have a like three to five stocks I’ll have a combination of some of the metal players and then uh you know the metal players who can export and the metal players who can who are undergoing uh you know copper mining who have already started building capacities for copper mining. So you’ll get proxy a little bit about other metals also there aluminium steel etc. But basically you’ll have copper also and then in the downstream one can have two three stocks from the cable and the wire place and u one more thing that comes to my mind as I’m talking about you know betting on the copper theme is eventually the whole theme will be a function of the copper price but what are a few leading indicators I should look at to understand the sense of where the copper market is headed is it I don’t know the RCTC charges or I don’t know is it the inventories that all of these companies hold. What what are a few key metrics you look at to make sense of where the copper market is headed so that even I can track that? U see usually uh all of these can be used in conjugation. Uh you know LMA inventory sort of tells you where the market is currently. You know how much inventory they want to hold at a certain price. uh if there is a shortage then you know element inventory might have to decline if the price is really short up because you have to pay that much to you know hold that inventory there is something called as yangen premium that tells you how aggressively China wants imported copper so high rising premiums or high rising yangen premium that usually implies that there is a very strong physical demand from China and remember China util still utilizes about 65% of copper and in the ex exports and use it domestically also. So high rising premium in yangen premium sort of indicate that there is a very tight domestic availability. There is strategic stockpiling which is happening whereas low or negative premiums often means where weak the demand is not sufficient etc. And uh then you have a look at all these miners where there is a supply issue like for example whenever a copper mine in Peru or in Chile they get disrupted and they get disrupted a lot because of uh environmental issues and because of unseasonal rains etc. So whenever these uh you know environmental things happens the supply gets impacted and you always see uh a spike happening in proper margins. So I think Yang premium this LMA inventories uh and disruption headlines across major mines these three three things I would look for you know tracking the copper sorry for the dumb question but when we say LM inventories what what exactly would that mean? So, LME is basically London London metal exchange. Uh it’s the largest uh metal exchange in the world and uh it basically tells you how much inventory a particular uh all the players are actually holding at one point of time at any point of time. So, this data is released every Thursday evening uh Indian time. That’s a one week dated uh entry. uh but uh it tells you you know how much the week on week inventories have changed whether they have gone up or whether they have gone down. So you know approximately in the last week how much the inventory has got exchanged how much are the uh you know warrants sold or bought into that it basically tells you you know how much easier is the availability or the financing happening or how much is the demand is impacting. So it’s a basically a figure to track the inventories on a weekly basis. Uh Amit if there is if there are few things about the copper that the industry the ecosystem that I failed to ask but are important for somebody who’s trying to you know make sense of the copper world. Uh do you want to talk about that if there’s anything I missed? Right. So I think uh it’s an interesting time we talking about it because uh it’s happening after like four five days of prime minister talking about India being a copper importer than exporter and we were an exporter of copper till about 2018 when the sterite plant sort of got shut down. So I mean without going into too much details about what happened was that plant got shut down because of the workers agitation and then the Supreme Court also sort of put an order to it. Uh now the interesting thing is that when it got shut down uh even four five years before that I think it was in 2013 a national tribunal was actually national green tribunal NGD was actually formed to evaluate this uh you know whether there is an environmental damage from the stuticorn plant uh into the nearby areas and there nothing came out of it. the same uh report was rejected and in 2018 again this uh you know clash happened and eventually you know the mine shut down in 2021 there were some unfortunate accidents firing happened few people got killed and all but because of that India’s eventually become a a importer of copper whereas we should have an exporter and that’s why that’s the real reason why you know in the past five years within the aturbar bharat scheme. India is now trying to have their own copper mining. So you are seeing Adani doing a copper mining in Kach Indalco is also doing uh even the JSWs and the Jindus of the world are also you know getting into the copper mining because this is a very essential commodity and a very essential commodity within the value chain of where India is currently heading into. We need to have this energy transition. we need to be part of the AI boom. Uh we need to have this electrification of vehicles and for all that we need copper. Uh so I think uh I hope that you know in the future this bitter sense prevails and the courts take cognizance of prime minister’s uh recent speech and the recent request and if we can get a situation where the mine at Tuticon actually gets open the plant basically gets opened uh it can provide a huge impetus to the atra bhara because remember it’s it was not a very small plant 20,000 people were working in it when when it got shut down. Uh and fine if there are any environmental concern then they should be resolved resolved and the plant should be brought back to uh into a running condition. That’s my hope sincere hope uh from what has happened in the last few few days. So uh one thing that Amit uh this leads me to is trying to understand then how do you value an asset like that plant which sits on the balance sheet of vanta. Again this is a company specific question but regardless how do you uh you know a certain value to it? Is there an optionality to it? Uh do we not consider this at all and consider it bonus? How do you how do you value such things when they are subject to something outside the control of the company itself? Yeah. So I have been tracking with Antab for quite some time uh and I don’t see any analysts you know actually assigning any value to the Uticon plant because they have sort of resigned to the fact that this is going to keep shut down and uh you know nothing will happen to it. Uh yeah because you know it’s not really dependent on uh on on the performance or the environmental issues. just the workers agitation union workers thing which has happened and you really don’t know when when Supreme Court is going to turn that decision already I think twice uh you know that decision has been put on hold and no no decision of opening plant has come on so you really don’t know I mean in India legal cases can go on for quite a long time whether we like it or not so currently there is no visibility that uh you know it happens but the hope is there you know sometime in the future since country needs it now than ever before hopefully you know something and positive can come out but as of today there is no value assigned to it and if I understand it correctly you know the Adani Kutch plant is also soon to be operationalized we’ll eventually start seeing some output from there and let’s say there’s a foreseeable future where you know uh even this plant sterlite plant goes live what this means for the Indian economy would be we’ll be now importing more of copper concentrate you know from these Latin American companies but at the same time hopefully this should reduce you know the cost of just copper downstream products for Indian companies making it uh easier to you know expand margins for these downstream players. Is that a good natural flow of logic as to what can eventually happen should this materialize or am I missing something else? Something more can happen. You know, none of these plans are going to be active in the next 3 years at least. Uh I think Adani plans is going to come up in 2029 and fully by 2031. I mean the full capacity utilization which is going to happen. So currently the environment you know prices could be high but who knows you know what will be the prices 3 to 5 years down the line when the full capacity comes on board. So I don’t think the logic of whether it is Adanis or Vidantaas or the JSWs and the Jindels of the world they are not betting on the current TCRC’s assumptions and TCRC’s volumes etc. They are making a longer duration strategic bet. You know that India would need economy which is less dependent on oil and which needs to be you know a futuristic electrical economy with the grids and the renewables and the EVs and the cables and it will be a manufacturing hub and an infrastructure buildout will be there. Uh you know India’s copper demand per capita that is far below China’s demand. China is at 9 ton uh you know India is at some point.5 ton so there is a huge gap which needs to be bridged and which means the domestic demand or runway is also potentially very large for the next 20 30 years for these players. So even if they take like 3 to 5 years to come on board and it helps India to reduce dependence on these materials on China and other players I think it’s a bet worth taking because India would need these miners to have copper within the country and utilize it because we’ll have sufficient demand in the next 20 years to when these mines come on demand my mines come you know running in by 29 30 whatever it is. So the the catch project uh you know I have been fortunate enough to you know have a little bit of uh uh seen a little bit with my own eye. So I I think it’s a very strategic long duration but a very strong infrastructure bet on India’s electrifications and I hope you know it sees the right right path going forward. Let’s say you know these things go eventually online. Let’s say the timeline is 2030, not anytime sooner, but still we will be at the mercy of the miners because I’m assuming we don’t mine a lot of copper ourselves. I’m not I don’t know how naturally gifted we are with the geographical gifts of having a lot of copper but I’m assuming most of it does come from you know Latin American companies countries. Uh is there a way around it or that’s just how it’s always going to be and we as India can only do so much? So at this point of time it looks a little difficult that you know how much we can actually smelt and uh until unless the domestic demand really shoots up then we have to find alternatives to actually mine here smelt here something which is China has done. If you know that Australia exports all its mining to China because the smelting is just not good enough or there is no very strong dem Australian demand. Whatever they are mining they have to export to China so that China can then export to the elsewhere in the world. So I think that is not the case with India. India needs to have the mining and there will be sufficient demand to have it. Now whether we are going to have a smelters enough to do it here uh that we have to see uh but we will not be completely independent of what’s happening with the with other economies somewhere we have to be dependent on you know the Latin Americas of the world because eventually you know it’s a issue of uh geographical location essentially we are not uh that lucky with the mining thing uh so we will be dependent on uh a lot But we can reduce that dependence. It’s it’s the same case with the oil you know we cannot be because we cannot mine oil that’s like 2% of the oil which we are coming out with the new mines but we will be dependent on Middle East to get the oil. Similarly we will be dependent but that dependency can reduce in going into the future after 2030. So eventually the best case scenario for India would be where our smelting and refinery capacity such where the miners themselves would be incentivized to send it all to India to make it make sense for them as well and that way we can have an upper hand just like how China has it right now. Yes. Yes, that’s my sense. Yes. I mean Amit, it’s been a lovely interaction. I learned a lot about copper and thank you so much for being patient with my questions. Uh any last words before we say your goodbye? You know it was a pleasure uh talking about uh about this and I hope your viewers and listeners find it useful. Always a pleasure to interact with you and the entire team at Zerodha. Um and thank you for having me. I hope I’ve learned a few things uh you know talking about. Thank you. Thank you so much Amit. Yeah thank you.