Wireless telephony great threat to copper industry

New Delhi, June 14 (UNI) The increasing shift from fixed telephone lines to wireless mode of commiunication (mobiles or WLLs), is posing a great threat to the copper industry, as the telecom sector is a major copper consumer, accounting for 35-40 per cent of its demand, according to a study.

The avaialbility of substitutes such as optical fibers also offer a strong competition to the metal, the study reveals.

Other metals like Aluminium, titanium, steel and plastic too substitute copper in areas including, electrical equipment, heat excahngers and pipe and plumbing fixtures in a large way.

However, the declining demand for the metal from telecom sector has been offset by strong growth in other user segments, including winding wires, power cables and other user applications.

The per capita consumption of copper in India is 0.3 kg per annum, which compares poorly with the world average of 3 kg per annum.

The study says that the country is expected to emerge as a potentially large consumer of copper and its domestic demand is expected to increase at an annual rate of 7.8 per cent per annum over the short term.

Copper consumption in India reported an increase of 5.9 per cent in FY2005 to 0.27 mt, and is expected to increase further to 6 per cent during FY2006 to 2.9 mt.

The high copper domestic demand is being attributed to the country's sustantially expansion plans to increase its power generating capacity, to reduce the frequency of power outages and provide the basis for strong economic growth.

Indian copper producers could also benefit from export oppurtunities in the Asian markets, which had reported an aggregate supply deficit of 2.8 mt in 2004, the study notes, adding that the deficit is likely to widen further over the next few years, which offers promising prospects for exports.

Despite a significant increase in global copper prices since the begining of 2004, world copper mine production is estimated to have risen only 2.8 per cent in 2005 to 14.91 mt, as compared to a growth of 6.1 per cent in 2004.

Even the production in Chile, world's largest copper producing country, is estimated to have declined 3 per cent in 2005.

The global copper consumption have declined 1.4 per cent during 2005 to 16.47 mt, from 6.7 per cent in 2004.

UNI VJ CS RK1613