Developments in the Indian Economy and Copper Industry and their Global Impact 08.11.2009 Ms. Ajita Bajpai Pande Ministry of Mines, India 1
Indian Economy : Performance 2
Indian Economy : At a glance World s largest democracy : Stable polity, Robust Economy and Strong Judicial System. Second fastest growing economy in the world. Fourth largest economy in terms of purchase power parity. Fast growing consumer base : current 400 mn and to reach 800 mn by 2020. Preferred destination for Global investors. Balanced economic growth : Manufacturing, Services and Agriculture. Robust and forward looking regulatory mechanism. 3
Overall Economy : GDP (Billion US$ ) 800 700 600 500 400 434 FISCAL YEAR 484 CAGR (FY03-09) : 8% 631 590 534 694 744 300 200 100 0 2003 2004 2005 2006 2007 2008 2009 Fourth largest economy in terms of purchase power parity 4
GDP (US$ Bn) : Break-up 800 CAGR : Services 9.1%, Industry 7.6 %, Agriculture- 4.9 % 700 600 500 400 114 155 116 168 117 182 124 190 126 300 90 200 100 230 319 347 386 422 0 2003 2006 2007 2008 2009 Services Agriculture Industry Healthy growth in all sectors of economy. FISCAL YEAR 5
Share in GDP (%) : Changing composition 100.0 80.0 60.0 40.0 20.0 0.0 49.2 56.3 62.6 21.5 20.4 20.0 29.3 23.4 17.5 1990-91 2000-01 2008-09 Agriculture Industry Services Service sector leading the growth momentum 6
GDP : Growth (%) 10 9 8 7 6 5 5.5 4.6 9.2 7.7 6.7 9 8.1 8.2 7.1 4.8 4 3 4.2 4.1 2 1 0 1998/2002 2003/07 2007/8 2008/9 GDP Industrial Manufacturing Temporary slowdown in growth momentum due to global situation FISCAL YEAR 7
Manufactured Goods : Growth (%) 20 18 16 15.2 18.1 18.2 14 12 10 10.8 12.1 11.1 9.9 8.3 8 8.9 6 4 2 4.1 4.8 6.2 0 2005 2006 2007 2008 Basic Goods Capital Goods Consumer Goods FISCAL YEAR 8
Corporate Performance (Manufacturing) : % growth Healthy all round growth in corporate sector sale and profitability. 9
Investment in Key Infrastructure : India US$ Bn Sector 2003-07 (Act) 2008-12 (Proj.) % Growth Electricity 70.5 150.4 113 Roads & Bridges 31.7 76.1 140 Telecom 22.5 65.1 190 Railways 20.3 62.2 207 Ports 1.3 18 1266 Airports 2.1 8.5 295 TOTAL (US$ Bn) 148.4 380.3 156% Massive investment growth in copper consuming sectors FISCAL YEAR 10
Copper Consuming Major Industry : Growth (%) 50 47.2 45.3 45 40 41.6 35 37.2 30 33.4 25 20 15 10 20.3 12.3 10.7 21.4 20.5 15.2 17.9 18.3 14.7 5 0 5.5 2002/4 2005/7 2008/9 Utility & Power Transport Infrastructure Engineering Auto & Auto parts Infrastructure and Power propelling growth. FISCAL YEAR 11
Indian Economy : Impact of Global Financial Crisis 12
Impact of Global Financial Crisis : Not a single Indian bank failed or faltered. Financial sector showed extraordinary resilience to weather global crisis a lesson to many world economic power. Quick recovery after temporary blip. Domestic consumption largely un-affected. Slowdown in GDP due to drop in exports exposure to Europe and USA. Quick Govt. response helped speedy recovery. Well poised to capture emerging opportunities. 13
Monetary Policy : A key stimulus tool Quick Govt. response helped early recovery from Global crisis. 14
Quarterly GDP Growth (%) : Positive GDP growth during peak of financial crisis. 15
Quarterly Industrial Production Growth : Quick rebound from impact of Global financial crisis 16
Expansion of bank finance to commercial sector (Rs. Bn) Strong growth in Bank finance to commercial sector almost at pre global crisis level. 17
Indian Copper Industry 18
Refined Copper Production Capacity : Kt Cu 600 500 500 400 400 300 200 100 50 50 0 Birla Sterlite HCL Jhagadia Additional smelting capacity of 400 Kt is expected to be commissioned by 2011/12 19
Copper Concentrates : Dependent on imports (Kt Cu) 1000 800 35 600 400 1000 965 200 0 Requirement Domestic Mines Imports World s leading mining majors supply concentrates to India. 20
Production by Indian Smelters : Refined (KT) 1100 900 700 708 641 650 500 300 227 330 396 519 100 54-100 1998 2000 2002 2004 2006 2008 2009 2010 (E) Self reliant in supply of refined copper to semis industry. FISCAL YEAR 21
Refined Copper Exports from India (Kt Cu) 450 430 400 350 325 335 300 250 200 190 226 224 230 190 150 100 81 KT 50 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 (E) FISCAL YEAR Net exporter today from net importer till 1998. 22
Consumption Pattern 23
India : Snapshots Population : 1.154 bn (growing @ 1.4%) Per Capita Copper Consumption : 0.6 Kgs (growing at 9%). Per Capita Electricity Consumption : 631 Kwh 138 million rural household still without electricity connection. Tele density : Overall - 33 %, Rural : < 12% Penetration of Refrigerators (Households) : < 15% Penetration of AC (Households ) : < 1% 24
India : Copper Consumption Growth Drivers A : Power sector : Major growth engine o Power Generation : Existing 141 GW To add further 145 GW by 2017. o Power distribution : Inter-regional grid integration : Existing : 8.1 GW To add further 30 GW by 2012 T & D Network further 2.1 Mn CKM : Existing : 5.7 Mn circuit KM To add Growth to range b/w 7 9 % o Rural Electrification : 100% electrification of 138 Mn rural households. 25
India : Copper Consumption Growth Drivers B : Infrastructure : o Ports : To add 830 Mn MT capacity by 2012. o Airports : Modernisation of 4 Metro and 35 non-metro airports. o Railways : Modernization and redevelopment of 21 railway stations and Route electrification and replacement of 72000 Conductor KM. Construction of dedicated Freight rail Corridors 3500 Kms o Roads : Construction of 165244 Km rural roads & up-gradation of 192464 Km. C. Consumer Goods : > 400 Mn consumers and growing. Projected to touch 800 mn by 2020. Young and aspiring population to fuel consumption. 26
Indian Copper Consumption Growth: Second only to China 1. More than 9% growth in past 20 years. To grow at 7% - 8% for next 20 years. 2. Copper consumption in India shall surpass Japan by 2012 and Germany by 2015. 3. Slated to become world s third largest copper consumer by 2020 after China and USA. 27
Sector-wise consumption pattern : Comparison 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 25 43 12 37.5 39.5 7.5 USA Europe Asia India 50 15 15 52 7 8 Industrial M/c & Equipments Consumer & General Goods Transport Equipment Building & Construction Electrical & Electronic Goods More aligned to consumption patter in Asia. 28
Copper Consumption in India : Total Copper 1200 Total :1100 KT 1000 150 800 Total: 547 KT 633 KT 160 600 400 72 106 100 110 67% 790 72% 200 369 423 0 2008 2009 2012 (Proj.) Domestic Smelters Imports Secondary Consumption in India to double in 4 years and cross 1 mn mt mark FISCAL by 2012. YEAR 29
Demand Growth (Refined) : Projected (KT) Total : 790 KT 2012 (Proj.) 150 95 425 120 Total : 369 KT 2008 85 45 190 49 0 100 200 300 400 500 600 700 800 Transformers Rotating M/c Cables Others Power and Electrical sector constitute major consumption. Fiscal Year 30
Refined Copper Consumption Growth 700 600 568 587 626 500 400 300 311 350 415 458 200 100 0 2003 2004 2005 2006 2007 2008 2009 FISCAL YEAR 31
Growth in copper semis production (Kt Cu) 1800 1730 1600 1400 1350 1200 1100 1000 800 600 400 200 550 770 900 0 2003 2007 2009 2012 2015 2020 To surpass Japan and Germany and become 3 rd largest consumer. FISCAL YEAR 32
Future Growth Drivers : New Applications Existing Emerging Transformers Magnet Wire Wires & Cables Rotating Machines Plumbing Tubing Renewable Energy Outsourcing Hub Auto Harness CTC/ Strips Quality Busbars Further Opportunities Hygienic Surfaces Aquaculture Appliance heat exchange 33
Indian Copper Industry : Major Challenges A. Raw material security : Entirely dependent on imported raw material and constraint in world supply shall impact competitiveness. B. Downstream products : Rapid expansion is underway Pace of capacity addition : Entrepreneurship and capital Access to right technology Talent availability to support massive growth Threat of direct imports : Components & assembled products C. Government Spending : Execution risk (delay) in infrastructure and power sector projects despite Govt. s thrust on these sectors. D. FDI : Large portion of projected growth is dependent upon projected FDI inflow coming true. 34
In summary India offers one of the best opportunity : o o o o o Fast economic growth massive investment in infrastructure and power sector. Large domestic consumption base consumer base to touch 800mn by 2020. Stable polity, strong judicial system and mature regulatory framework. Healthy corporate presence and strong corporate performance. To play key role in emerging global economic order particularly post financial crisis era. Strong growth in copper and copper based industry : o o o Self reliant in refined copper production to remain net exporter in years to come. Rapid expansion in Copper semis capacity - large investment is underway to meet demand in coming years. Domestic consumption of copper in India to surpass Japan by 2012 and Germany by 2015. o To become World s third largest copper consumer by 2020. 35
Thank You 36