Adani enters metals business with mega $5bn investment plan
MUMBAI, 3 days ago
The Adani Group, one of India’s leading conglomerates, is expanding its footprint in the metals industry with a massive $5 billion investment plan over the next five years, said media reports.
It will be setting up aluminium and steel businesses along with ramping up copper production in India.
This significant move into the metals production aims to leverage synergies with Adani’s existing infrastructure, energy, and logistics operations.
According to a report in Mint, the Group will spend this amount in the next three to five years on mining, refining, and production of copper, iron, steel, and aluminium. Of the total investment, $2 billion will go for copper and the remaining amount for other metals.
To pose tough competition for rivals
Adani Group's latest venture is likely to give tough competition to industry majors like Anil Agarwal-promoted Vedanta, Aditya Birla Group’s Hindalco Industries and Tata Group, the report added.
This is the second time that the group has invested such megabucks in the metal industry, wherein, for the first time in 2022, the enterprise declared an investment of $5.2 billion in developing an alumina refinery in the eastern Indian state of Odisha.
On one hand, the recently announced investment plan will likely boost the group's infra business. It may also save on energy production costs by offering more affordable energy solutions than rivals.
The Adani Group has come up with the funding for the nation's metals business 2 years after its grand entry and consequent success in the country's cement sector.
Notably, The Adani Group started the first phase of its copper operations with a smelter capacity of 500 ktpa in March.
The conglomerate has been eyeing to tap into the aluminium and steel market and had secured approval to build an alumina refinery and a captive power plant in Rayagada, Odisha.
Though the work on this project is yet to commence, the company has previously considered setting up an alumina refinery under its subsidiary, Mundra Aluminium.
Adani Group will have a face-off with industry giants such as Hindalco, Vedanta and Tata Group, riding the synergies shared with its other businesses.
"The group is well-positioned to enter other metals, including aluminium, iron and steel," a person close to the group told the Economic Times.
Strategic shift in India’s metals sector
The Adani Group’s venture into the metals sector reflects a strategic shift, aligning with its recent diversification efforts in cement. Similar to its venture into cement through the acquisition of Ambuja Cements and ACC, Adani’s expansion into metals is expected to challenge industry incumbents, including Tata Steel and Hindalco Industries, said industry experts.
This $5 billion investment, spread across the next 3 to 5 years, focuses on copper, aluminium, and steel—3 crucial metals for India’s industrial and renewable energy ambitions, they stated.
A substantial portion of Adani’s investment will target copper production, with an estimated $2 billion allocated to expand its Kutch Copper plant.
"India’s demand for copper, especially in renewable energy and electric vehicles (EVs), is expected to double over the next 5 years. Copper is vital for wiring, cabling, wind turbines, and EV motors, and Adani aims to meet this rising demand while reducing India’s reliance on imports," stated the experts.
Aluminium, too, is essential for solar panels, wind turbines, and other renewable energy infrastructure.
Currently, Adani imports aluminium dust for its solar panel production. With $3 billion allocated to aluminium and steel, Adani plans to establish its own aluminium assets, significantly lowering production costs.
Ambitious renewable energy goals
The Adani Group has ambitious renewable energy goals, aiming to achieve 50 GW of renewable capacity by 2030. Aluminium and copper are critical materials for renewable energy infrastructure, including solar panels and wind turbine components.
By producing these metals in-house, Adani will reduce material costs and achieve greater control over its energy production ecosystem.
In addition to aluminium and copper, iron and steel will play a vital role in Adani’s infrastructure and construction projects, including roadways, real estate, and other large-scale developments.
The new investments are part of Adani's strategy to ensure captive consumption for its green energy and infrastructure projects, reported Mint.
With a goal of reaching 50GW in renewable energy by 2030, securing its own supply of aluminum and steel is seen as crucial for building solar and wind power infrastructure, it stated.
Adani Group has been looking to expand its footprints to sectors which has so far been beyond its reach. After entering the cement industry two years ago, the group, through its flagship Adani Enterprises Limited (AEL) secured an iron ore mining contract in Odisha, thus marking its entry into India’s iron and steel production.
According to experts, Adani’s $5 billion investment in metals is more than just an expansion - it’s a transformation of India’s infrastructure and energy landscape.
By producing essential metals domestically, Adani is helping India achieve greater self-sufficiency, reducing dependency on imports, and lowering production costs across its value chain, they added.
