Adani Group Likely to Foray into Metals Market with $5 Billion Investment

Gautam Adani-led Adani Group is likely to enter the Indian metal industry with an investment worth $5 billion over the coming three to five years. The conglomerate’s natural resources division will invest the funds in mining, refining and production of copper, iron and steel, and aluminium, the Mint reported, citing sources. The group is likely to invest $2 billion in the production of copper and $3 billion in other metals.  

Adani’s entry into the metals industry will also benefit the conglomerate’s other businesses, including renewable energy, transmission, ports and infrastructure. 

“That will be significant and critical for the group’s green energy business to have own aluminium assets may play a critical role in the group’s energy production costs and attaining better sales margins than others,” a source in the Mint’s report said. 

Will Adani’s arrival shake existing industry players? 

As the billionaire eyes the metal industry, it will face competition from the existing players in the market, including Anil Agarwal-promoted Vedanta, Aditya Birla Group’s Hindalco Industries and Tata Group. Tata Steel is one of the leading steel manufacturers in the world. According to the smallcase report, Tata steel and JSW Steel are the biggest players with market capitalisation worth Rs 2,04,292 crore and Rs 2,11,648 crore. 

While the existing companies have a strong market base, Adani Group, with no dearth of resources, is likely to challenge the industry’s old players. 

What might be driving Adani Group’s entry into the metal industry? 

India’s economic growth along with rapid urbanisation is driving the need for social as well as large-scale infrastructure in the country. Additionally, India’s population growth has increased the demand for real estate, particularly residential. According to real estate consultant CREDAI and Colliers’s report, the real estate sector is projected to grow from $0.2 trillion in 2021 to $1 trillion by 2030. 

Cement, a key material required for infra building, was another key area where Adani ventured two years back. In 2022, the Group entered the cement industry by acquiring Ambuja Cements and ACC for $6.6 billion. 

Moreover, the growing population has also increased the demand for energy, including renewables. Adani’s entry into the industry is likely to benefit the development of infrastructure and decrease dependence on imports of these key metals.