The principal inputs of our copper business are:
Copper concentrate is the principal raw material of our copper smelter. Copper concentrate is purchased at the lme price less a Tc/Rc that we negotiate with our suppliers but which is influenced by the prevailing market rate for the Tc/Rc. In general, our long-term agreements run for a period of three to five years, and are renewable at the end of the period. The quantity of supply for each contract year is fixed at the beginning of the year and terms like Tc/Rc and freight differential are negotiated each year depending upon market conditions.
During fiscal 2008, we sourced approximately 65% of our copper concentrate requirements through long-term agreements.
We also purchase copper concentrate on a spot basis to fill any gaps in our requirements based on production needs for quantity and quality. These deals are struck on the best possible Tc/Rc during the period and are specific for short-term supply. During fiscal 2008, we sourced approximately 24% of our copper concentrate requirements through spot purchases.
Our rock phosphate is currently sourced from Jordan, Egypt, Nauru and Algeria pursuant to contracts renewed on an annual basis, with pricing fixed for the year. These contracts provide for minimum supply quantities with an option to increase if required.
The electricity requirements of our copper smelter and refinery at Tuticorin are primarily met by the on-site captive power plants. Our captive power plants at Tuticorin operate on low sulphur heavy stock that is procured through long-term contracts with various oil companies. Our Silvassa facility relies on the state power grid for its power requirements.
Our Copper Business Has A Number Of Elements, Which Are Summarized In The Following Diagram And Explained In Greater Detail Below: (Click here to view the Diagram)
Copper cathode is used as a starting material for copper rods. Copper cathodes are also used for making alloys like brass, bronze and alloy steel, with applications in defense and construction. Our cathodes meet international quality standards and are registered as lme “a” grade.
Our copper continuous cast rods meet all the requirements of international quality standards. Our copper rods are currently used primarily for power and communication cables, transformers and magnet wires.
Sulphuric acid is used as a starting material for phosphoric acid. Most of it is used in our phosphoric acid plant while the rest is sold to fertilizer manufacturers and other industries.
Phosphoric acid is produced at our plant by chemical reaction of sulphuric acid and rock phosphate, which we import. Phosphoric acid is sold to fertilizer manufacturers and other industries.
Other by-products of our copper smelting operations are gypsum and anode slimes, which are sold to third parties.