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India copper units need to modernise -expert

NEW DELHI: The outlook for India's copper and alloy fabricating industry is bright but much restructuring is needed to modernise the industry, a top analyst said on Monday.

Simon Hunt of Britain's Simon Hunt Strategic Services told a conference on Indian metals that copper use in electrical, building and automobile industries was expected to grow rapidly in the next decade.

Presenting a study at the two-day conference conducted by London's Metal Bulletin, Hunt said copper consumption would get a boost from overall growth in industrial output.

But copper and copper alloy makers will have to respond to the demands, he said.

"In our view, based on conservative economic parameters, the outlook for India's copper and copper alloy fabricating industry is bright, but much restructuring has yet to to be accomplished to bring the industry up to modern practices," Hunt said.

Total copper consumption is forecast to increase by an average seven percent a year to reach just over 600,000 tonnes by the year 2000 and 700,000 tonnes five years later, Hunt said.

Construction will probably be the fastest growing sector with an annual average increase of 19 percent, followed by industrial machinery and equipment at 11 percent and electrical industry at nine percent, he said.

Hunt predicted industrial production would grow an average of eight percent a year over the decade beginning in 1998 after a two-year slowdown in the pace of the overall economic growth.

Hunt said many units making copper wire and cable used technology that was hardly relevant to the production of electrical and other goods which are traded globally.

"To compete in the world marketplace, Indian manufacturers will have to meet increasingly tight quality and technical specifications," he said.

"Indian copper and copper alloy fabricators will have to redress this handicap either by entering into technical agreements or joint ventures," Hunt said.

Such a development would result in widescale restructuring of India's copper fabricating industry, he said.

As the manufacturing sector is forced into producing goods that meet international standards, factories will have to be made larger and more capital intensive, Hunt said. That will mean fewer but larger players, he said.

"Time for change has arrived," Hunt said.

India at present produces 50,000 tonnes of copper-in- concentrates and about the same volume of cathode copper from two smelter-refinery complexes of the state-owned Hindustan Copper Ltd. There are plans to expand both units.

Delegates to the conference said that four new copper smelters are also being planned to produce about 400,000 tonnes by the year 2000.

Hunt said India's use of secondary copper such as scrap was very high, which he attributed to the shortage of domestically produced primary copper.

In the beginning of the next century India will probably build its fifth smelter or expand some of its new facilities to meet anticipated growth, he added.-Reuter