Closure of copper facility in Tamil Nadu costs Vedanta Group $600 mn

The factory closed in March 2018 for annual maintenance first, and later due to protests when the govt issued an order to close the facility.

With the copper smelting plant of Vedanta Group’s Sterlite Copper in Thoothukudi (Tamil Nadu) lying shut for close to two years now (since May 2018), the losses incurred by the company due to the shutdown are estimated to be around $600 million so far.

The firm has been incurring losses for six consecutive quarters due to the closure and is now seeing a daily loss of Rs 5 crore, said a company executive. The company has been fighting a prolonged legal battle and is now waiting for the Madras High Court’s order on the issue.

The factory had been facing protests from locals for several years over the all­eged emissions from the factory. The protests took a turn for the worse after the company announced that it would double the plant’s capacity to 800,000 tonnes at an estimated investment of Rs 2,400 crore. 

The expansion was put on hold after 13 people were killed in police firing during the protests. The company’s application for renewal of consent to operate (CTO) for the existing copper smelter was also rejected by the Tamil Nadu Pollution Control Board (TNPCB) in April 2018. 

This was followed by the state government disconnecting power supply to the factory and ordering permanent closure of the facility thereafter.

Sterlite approached the National Green Tribunal, New Delhi, which set aside the TNPCB’s closure order and passed fresh orders for renewal of consent. 

The state government approached the Supreme Court, which in turn, set aside the NGT order and asked the company to approach the Madras High Court. At present, the matter is pending with the high court.

The Thoothukudi plant accounted for 40 per cent of India’s copper smelting capacity and production in India fell by 46.1 per cent during FY19 due to closure of Sterlite’s 400,000 tonne production facility in 2018. 

The factory closed in March 2018 for annual maintenance first, and later due to protests when the government issued an order to close the facility.

The facility contributed around Rs 635 crore to the local economy and Rs 2,559 crore to the exchequer by way of taxes and statutory contributions.

Piyush Goyal, minister of commerce and industry, recently told Rajya Sabha that imports of refined copper had increased from 44,245 tonnes ($294.95 million) in 2017-18 to 92,290 tonnes ($605.20 million) in 2018-19. 

Indian exports of refined copper had declined from 378,555 tonnes ($2,435.57 million) in 2017-18 to 47,917 tonnes ($302.27 million) in 2018-19. 

This resulted in net imports of 44,373 tonnes ($302.93 million) in 2018-19 from 334,310 tonnes ($2,140.62 million) in 2017-18.

During April-November 2019, imports and exports of refined copper stood at 109,324 tonnes ($684.02 million) and 18,300 tonnes ($106.35 million), respectively.

“Domestic production and exports of refined copper have declined largely due to closure of the copper smelting plant of Vedanta at Tuticorin,” the minister had said.