 "copper")
The long-term trend for copper is bullish, due to rising demand from grids, data centres and AI (artificial intelligence) infrastructure. But in 2025, copper has been bullish due to supply disruptions, and fear of potential US tariffs. Inventories outside the US are low, and there could be further price upside if global demand for copper picks up.
Supply was in deficit by 200,000 tonnes for 2025 and in 2026, supply is likely to be in deficit to the tune of around 600,000 tonnes. Mining has been disrupted, and refined metal production has been hurt by tariff risks. Chile, the world’s largest copper producer, is experiencing falling ore grades.
Flooding at Kamoa-Kakula mine in DRC (Dem Republic Congo), an accident at El Teniente mine in Chile, and declaration of force majeure at Grasberg mine in Indonesia have hit ore supplies. These incidents have prompted global miners to reduce guidance for CY25 and FY26.
US tariff policies have caused price distortions between US COMEX and LME benchmarks. Traders have stockpiled refined copper in the US to front-run potential tariffs, pushing COMEX prices well above LME. Though refined copper has so far been exempted, a potential 15 per cent tariff hike will be reviewed in June 2026. If a tariff is imposed, it will lead to wider price differentials. If tariffs are not imposed, stockpiled US copper may be sold, leading to global surplus.
China is now exporting due to weak domestic demand and surplus refined output. Despite low margins, China has produced 10 per cent more refined copper year-on-year (Y-o-Y) between January-October 2025. Upside risks to copper prices include cuts to Chinese domestic output, additional supply disruptions and higher global demand. Downside risks include weaker global demand, and US tariff policy changes that release inventory onto global markets.
India’s refined copper demand is expected to surpass 2.5 million tonnes over the next decade and global copper demand is expected to increase by around 37 million tonnes by CY35. Given this scenario, Hindustan Copper (HCP) is well-placed.
HCP is the sole Indian operator of copper mines with seven mines across Jharkhand, Rajasthan and Madhya Pradesh. India’s demand for copper is expected to more than double over the next decade, driven by RE (renewable energy) capacity creation, more digital infrastructure, electric vehicles, AI Data Centres and so on.
Production volumes for HCP may rise by over 3.5 times to 12.2 million tonnes by FY31, from 3.47 million tonnes in FY25. Volume had been stagnant for years due to regulatory delays and closure of key Jharkhand mines.
However, the execution of Kendadih mining lease on October 4, 2025 and the lease of Rakha mine in September 2025 meant HCP had surmounted all major legal and regulatory hurdles. Its leases are now valid for the next 15-20 years.
HCP is now on track to surpass 12 million tonnes of ore production by FY31, including Mine Development Operator (MDO) production. Given current global supply-demand equations, HCP has a clear strategic edge. Apart from ramping up production at its flagship mine, Malanjkhand Copper Project (MCP), to 5 million tonnes, HCP could re-open several previously operational mines. Operations at Surda resumed in October 2024 after four years. Apart from MCP, KCC in Rajasthan may produce 3 million tonnes and Rakha mine (under MDO model) may also contribute 3 million tonnes to total output.
HCP is, therefore, well placed to capitalise on this structural up-cycle. However, HCP’s FY26 ore volume is expected to be 10 per cent lower than the estimated 4.35 million tonne, due to prolonged monsoons, logistical challenges and temporary labour shortages.
The medium/long-term ramp-up could lead to revenue and Ebitda rising four times by FY31. To ramp up volume from 3.47 to 9.2 million tonnes (excl. MDO), HCP has a ₹2,000-crore capex plan. It has the balance sheet strength and cash flow to fund the capex through internal accrual though it has passed a resolution to raise debt or issue bonds as necessary.
Whilst the stock has re-rated over the last six months, there could be a big upside. HCP has industry-leading Ebitda margins and good RoE (return on equity) apart from high growth potential. While it faces risks like price volatility, potential delays in execution and depletion in ore quality, it’s likely to be a front-runner in the copper mining industry.
