The Tamil Nadu state disconnected the smelter's power supply in May following anti-pollution protests that turned violent and culminated in the police opening fire, killing 13 protesters.
Cochilco lowered its average copper price prediction for this year by $0.03 to $2.97 per pound on Thursday in its second negative projection in six months.
The company said the expansion, to start in early 2019, would add an average 60,000 tonnes of copper a year to its production over the first 15 years of operation.
China is the world's biggest consumer of the metal but its own copper mine production has been stagnating amid a broad crackdown on pollution, exacerbating a heavy reliance on imports.