Indian conglomerate Adani has signed contracts to purchase 1.6 million tons per annum (tpa) of copper concentrate for a large-scale, single-location smelter for the industrial metal.

The initial 500,000 tons of capacity at the $1.2 billion facility in Mundra in the Indian state of Gujarat will start operations next month, according to New Delhi Television.

The capacity can be expanded to one million tons by March 2029 to address the potential doubling of Indian copper demand by the end of the decade.

The move is part of Adani Enterprises’ hunt for resource security in critical minerals and resume of capital expenditure after a short-seller attack in January this year.

Mundra Smelter is starting up at a time when the copper market is experiencing a collapse in the fees that are charged miners due to inadequate ore to go around.

Adani Natural Resources CEO Vinay Prakash, in an interview, said: “A combination of high operating costs and the low fees means smelters and refiners globally may be forced to curtail production.

“Our plant will be a low-cost producer with higher metal recovery and this will help us to remain competitive in the market.

“The concentrate deals are a mix of short- and long-term arrangements, without disclosing the suppliers. Concentrate supply is likely to increase in the medium- to long-term as more mining projects, including in Africa and Peru, come on stream.”

Recently, the Indian government has recommended environmental approval for Adani’s proposed Gondkhairi coal mine in central India, despite public opposition.

According to the ‘Adani Watch’ report, local communities are fearing water shortages due to the underground mine and adverse impacts on farming.

In July last year, protesting farmers disrupted a public hearing into the project, forcing government authorities to terminate the meeting abruptly.

The Gondkhairi region near Nagpur, Maharashtra, where the mining lease is located, is already experiencing a decline in water resources, said the publication.