The conglomerate will challenge incumbents such as Anil Agarwal-promoted Vedanta Ltd, Aditya Birla Group’s Hindalco Industries Ltd and Tata Group, riding the synergies shared with its other businesses.

Adani’s natural resources division has decided to spend the amount over the next 3-5 years on mining, refining and production of copper, iron and steel, and aluminium, two people aware of the plans said on the condition of anonymity.

“The group is well-positioned to enter other metals including aluminium, iron and steel,” said a person close to the group, which started the first phase of its copper operations with a smelter capacity of 500 ktpa in March. Out of the $5 billion, $2 billion will go into copper, and the rest $3 billion into other metals, the person said on the condition of anonymity.

Some of India’s largest metals businesses are run by Vedanta (aluminium, zinc-led-silver, iron and steel, nickel) Tata Group (iron and steel), Hindalco (copper and aluminium) and JSW (steel).

Metals offer significant synergies with Adani’s renewable energy, transmission, logistics, ports and infrastructure businesses, the two people said.

An email sent to Adani Group remained unanswered.

In 2022, the Adani Group entered the cement sector by acquiring Ambuja Cements Ltd and ACC Ltd for $6.6 billion, sparking a rivalry with Aditya Birla Group’s market leader Ultratech Cement Ltd, and marking the beginning of consolidation in the industry.

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Just as in the case of cement, Adani sees synergies in metals, one of the two people cited above said. Adani, which operates in power and transportation, has an edge in metals since these account for a big part of the metals business, the person added, pointing out that a more important reason is captive consumption. “That will be significant and critical for the group’s green energy businesses (solar, wind and green hydrogen) and transmission,” the person added.

“It is critical to have end-to-end ecosystem in order to keep costs and production under control. Most of these (metals businesses) should be created over the next 2-3 years,” said the first person.

The two people said since the group, which aims to reach 50GW in renewable energy by 20230, itself needs a lot of aluminium for manufacturing solar panels, frames, stands, and wind turbines, the plan to have own aluminium assets may play a critical role in the group’s energy production costs and attaining better sales margins than others.

“This benefit can be further passed on to the consumers. As the production costs are lower, the output costs will also be low. Further, at the macro or industry level, demand-supply balance will ensure less volatility of these commodities and lower dependency on foreign suppliers,” said the first person.

At present, the group imports aluminium dust for manufacturing solar panels, frames, electrical transmission systems and wind turbines.

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Three years ago, Adani group had considered setting up an alumina refinery under a wholly owned subsidiary Mundra Aluminium Ltd, but this arm hardly has any business till date.

In 2022, Adani got an approval to build an alumina refinery and a captive power plant in Rayagada, Odisha, but the work on this project is yet to begin.

The group’s copper plant, however, has just got operational under a subsidiary Kutch Copper and in the coming quarters the group plans to invest around $1 billion more to double its capacity.

“India’s direct copper demand is expected to double over the next five years, which means dependency on imports will rise unless incremental supply comes,” said the second person.

Apart from wiring and cabling for power generation and transmission, copper is used in manufacturing wind turbine motors (green energy) and in electric vehicles (EVs). Adani group’s primary rivals both in copper and aluminium will be Vedanta and Hindalco.

While Adani group itself is in the business of thermal and green power generation, it plans to sell copper to EV players and other power sector players as well.

Similarly, the group needs iron and steel too for its infrastructure businesses like roads, real estate and other constructions, said the two people.

On 5 November, in a call with analysts, Adani Enterprises Ltd, the group’s flagship, said in the mining services portfolio, during the July-September quarter, AEL received letter of award for development and operations of iron ore mine at Taldih, Odisha with a capacity of 7 mtpa. In the iron and steel business, Tata Steel Ltd and NMDC Ltd will be key rivals.

AEL has signed an MDO (mine developer and operator) agreement for a coal mine at Dahegaon with Ambuja Cements in Maharashtra. With these new mines, AEL’s MDO business has 9 coal blocks and 2 iron ore blocks.

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During the September quarter, total mining services dispatch volume was up by 32% to 8.2 million metric tonnes, while revenue increased by 64% to ₹803 crore and the operating income increased by 65% to ₹400 crore on year-on-year basis, said the company to the analysts.

The $5 billion being planned for the first phase of the group’s metals foray is over and above the investment already made by the group in Kutch Copper.

“These (metal) businesses offer high RoCEs (return on capital employed), almost over 25% in some cases,” added the first person.