Red signals from green protests: Impact of Sterlite closure on livelihoods

Amritha Chemicals, a chemical manufacturing unit at Thoothukudi in southern Tamil Nadu, was set up around six years ago. It was one of the many small and medium downstream industries that started operations for which the main raw materials are sulphuric acid and fluorosilicic acid, by-products from the Vedanta group’s Sterlite Copper facility at Thoothukudi. The Amritha Chemicals factory employs nearly 100 people.

Gomathi Engineering is another unit in the same area that does fabrication work for the Sterlite plant. It employs around 200 people and had annual revenues of about Rs 1 crore.

Both units have been closed since the Sterlite factory was forced to down shutters on May 22, 2018, after a protest against the plant’s allegedly poor pollution management practices went out of hand and a plainclothes officer opened fire, killing 13 people. The protests had begun in February after Sterlite started work on a Rs 2,500 crore plan to double the plant’s capacity to 800,000 tonnes per year, when local villages, activists and  politicians alleged that the plant was environmentally hazardous.

Later, the Tamil Nadu Pollution Control Board turned down the company’s application for the renewal of Consent to Operate licence, and the state government ordered the factory to close. Since then, the company’s efforts to get the factory reopened have been unsuccessful, barring a decision from the National Green Tribunal (NGT).

On August 18, the Madras High Court order upheld the importance of environmental concerns over economic considerations and ordered Sterlite to keep the Thoothukudi plant closed.

In its 815-page judgment, the court said that the factory was in a highly polluting industry and it raised a series of issues against the plant’s handling of hazardous wastes. The court even pulled up the Pollution Control Board for allowing the plant to run initially. 

On its part, the company claims that the hazardous wastes identified by the state pollution control board had been delisted. Senior advocate C A Sundaram, appearing for Vedanta, described the high court’s decision to keep the plant closed as “retrograde”. He also said “the factory is in dire straits” and asked the court to protect the company from any “coercive steps” from the state government.

On the concern over pollution, which is key to the entire issue, Sterlite’s argument is that there is a case for heightened pollution in the Thoothukudi area, but it has not been conclusively proven anywhere that Sterlite specifically was the cause of it. There are 67 other “red category” industries in the area, including thermal power plants of 5,000 Mw (some of them decades old).

“We firmly believe in the environmentally sound nature of our operations,” countered Pankaj Kumar, CEO, Sterlite Copper. “At no point in our operations were any concerns of pollution raised by the appropriate authorities,” he added.

He argued that the emission norms set by the authorities when the smelter opened in 1994-95 was 4 kg of sulphur dioxide (SO2) per tonne of sulphuric acid (H2SO4), a key raw material in the smelting process. Later the norm was revised to 1kg of SO2 per tonne of H2SO4 in line with international standards. To comply, the company says it has spent Rs 400-500 crore in bag filters, scrubbers, tail gas scrubbers and so on since 2013 and says its SO2 emissions are now 0.5 kg per tonne of H2SO4. “Legal luminaries heard our case in the NGT and passed judgment in our favour on merit alone,” Kumar pointed out.

While all the parties concerned, including environmentalist lobbies, are pointing fingers at each other, the case is sub judice. But the fact is that caught in the crossfire are the livelihoods of around 50,000 people — excluding downstream industries such as Amritha Chemicals and Gomathi Engineering -— that are part of an ecosystem that includes truckers, contractors, labourers, real estate market and even tea shops that came up around the plant. 

The company claims it has been spending around Rs 600 crore on the local economy, logistics, local imports of materials, contract employees and so on. Thoothukudi is one of the drier parts of the state so few industries have come up here, except for power plants, chemical plants, salt production and a port.

For Vedanta the loss from the closure of the pant is estimated at Rs 5,000 crore; Sterlite Copper accounts for roughly 35 per cent of the country’s copper demand. “It is disheartening to note that at a time when our nation is forced to depend on hostile neighbours for copper imports, certain forces are conspiring to stifle our nation’s ability to be an independent copper manufacturer,” Kumar said.

He said the state and the Centre exchequer have lost an equivalent amount in the past two and half years owing to customs duties since the plant used to import raw materials such as copper concentrate, rock phosphate, limestone, coal, pet coke and so on.

Milan Mehta, Managing Director, Precision Wires India Ltd, said there has been a significant impact on the entire downstream copper processing industry comprising thousands of MSME units as a result of the Sterlite Copper plant closure.

Last year, the downstream industries made do with imports coming in through the Free Trade Agreements (FTAs) with Japan but that source has dried up owing to the higher duties imposed by the Centre. “The capacity of good quality, cost-competitive copper cathodes/rods in the country has been curtailed, which will, in turn, cause issues related to material availability once the economy picks up. This will lead to higher imports which may not be cost competitive and will impact the entire domestic downstream industries including ours,” Mehta, who is also the Vice Chairman of the Winding Wire Association, pointed out.

“We in the copper downstream industry are keen that a suitable solution is found within the existing legal framework, and hope that the smelter is allowed to restart,” he added.

Relief may be some time away. When the matter came up for a hearing on August 31, the Supreme Court gave the Tamil Nadu government four weeks to respond. The next hearing depends on whether the state government meets that deadline.