The decision by a provincial government in India to shut down a copper smelter plant may have serious repercussions on copper supplies, not only in India but also globally, experts claim.
The Tuticorin-based plant was ordered shut by the government of the Tamil Nadu State after hundreds of angry local residents spilled out on the road to protest against the plant’s environmental impact on people’s lives. The protests turned bloody, as police firing led to the deaths of 13 protestors, Reuters report, and the permanent shutdown of the plant.
In its wake, the Tamil Nadu government, succumbing to continued public and political pressure, endorsed a closure order issued in May last year by the State’s pollution control board, effectively shutting down the plant.
Sterlite Copper is owned by the London-based Vedanta Group. The management clearly is not going to let go without a fight. The plant has been under a cloud for several years because locals have alleged that pollution from the smelter has led to health problems, including cancer.
But CEO P. Ramnath has been quoted as saying the closure of the plant would push India’s annual import bill by an estimated $2 billion.
The Tuticorin facilities include a custom smelter, a refinery, a phosphoric acid plant, sulphuric acid plants and a copper rod plant. In addition, there are a captive power plants located in Tuticorin.
As per one estimate, about 4,000 direct jobs and the livelihoods of another 20,000 people will be affected by the closure. Vedanta Sterlite is one of the largest copper producers in the country, and its closure means manufacturers in sectors ranging from electrical to defense will have to turn to imports.
In another move, the Tamil Nadu States Industries Promotion Corporation also canceled deal allotting land for the expansion of Sterlite Copper’s smelting plant.
In November 2017, Vedanta’s board approved the expansion of its copper smelter to 800,000 ton per annum from the present 400,000 tons per annum, with a capex of U.S. $717 million, of which U.S. $141 million has already been spent.
If that expansion were over, it would have made the smelter one of the world’s largest single-location copper smelting complexes.
On its part, Vedanta has termed the government’s order “an unfortunate development,” and said it would study it before deciding what to do next.
India’s annual copper consumption is expected to almost triple to 2 million tons in the next decade, according to a projection from Hindalco Industries Ltd. Vedanta produced about 48% of the country’s total copper output of 842,961 tons in 2017-18, according to government data.