Vedanta Shares Rise After Indian Court Order to Restart Shuttered Copper Smelter
In a ruling that caught many by surprise, an environment court in India set aside a provincial government order to shut down Vedanta’s copper smelter plant permanently.
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This is the same plant over which the local population in the southern Indian state of Tamil Nadu have been protesting primarily because of pollutants from the smelter.
It was this plant in Tuticorin that was ordered shut down by the government after hundreds of angry local residents had, in May this year, spilled out on the road to protest against the plant’s environmental impact. As we noted earlier this year, the protests turned bloody, as police fired on the protesters, killing 13 people.
With this new legal order, Vedanta has high hopes of restarting this vital smelter, but the Tamil Nadu government says it will not budge, and would file an appeal in the country’s highest court.
A report on moneycontrol.com said the National Green Tribunal’s (NGT) ruling had raised hopes of a revival, especially because the shutdown of Vedanta’s copper smelter had “dealt a blow to its valuations.”
The tribunal directed the Tamil Nadu state pollution regulator to pass a new order of renewal of consent for the smelter within three weeks. It also directed Vedanta to spend about U.S. $14 million (about 1 billion rupees) in three years for the local people’s welfare.
But the Tamil Nadu Environment Minister told reporters after the ruling that his government will fight this order, since it does not want the smelter to reopen.
Vedanta Ltd is part of the oil-to-metals conglomerate Vedanta Resources, run by Indian businessman Anil Agarwal. The Tuticorin smelter is one of the two largest in India, and Vedanta desperately wants it to resume operations as the group braces for rising raw material costs.
At the time of the closure in May, Sterlite Copper Vedanta Ltd CEO P. Ramnath said 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.
News of the tribunal order was welcomed by the Indian share market.
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On Dec. 17, Vedanta’s shares rose by 6.5% in early trading following news of the ruling. Towards the end of the day, it cooled off a little after the Tamil Nadu government made it clear that it planned to challenge the order at the Supreme Court of India.
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