Five years on, Sterlite Copper plant closure haunts Thoothukudi

Way back in 2005, N P Gopalakrishnan and his partners started a company called Amrita Chemicals with an investment of around Rs 12 crore. It used to source fluorosilicic acid (a waste material), from the copper smelter owned by Sterlite’s copper plant in Thoothukudi, and convert it into sodium silicofluoride, which is used in industries such as glass, rubber and metal fluxes. At its peak, Amrita Chemicals used to export to several countries and its domestic clients included the likes of Piramal Glass (now PGP Glass) and Borosil.

Exactly five years ago in May 2018, Vedanta’s Sterlite Copper was closed following an order issued by the Tamil Nadu Pollution Control Board (TNPCB). This was after police fired on protestors that killed 13 people and left 102 injured. The protests were against Sterlite’s plans to double its annual capacity to 8,00,000 tonnes, which, the protestors said, would have increased the toxic impact on the environment and health from the operations of the plant.

The closure of the copper smelter changed Amrita Chemicals’ fortunes forever. For more than a year, the company used to pay salary to its 110 employees in the hope that a court ruling would favour reopening the plant. Now, talking to Business Standard, Gopalakrishnan and partners are in the process of abandoning the plant and moving to Odisha after getting a contract from Paradeep Phosphates. “We have suffered a loss of over Rs 15 crore and the additional equipment damages of closing down a chemical plant for around five years is even more,” he said.

This is not the story of just Amrita Chemicals, but of around 400-odd downstream units, 40-odd contractors and even transport companies. According to a study conducted by research and advocacy firm CUTS International with funding from Niti Aayog, the closure of the Sterlite Copper unit led to an overall economic loss of around Rs 14,749 crore till May 2021 alone, with the impact on the government revenues at Rs 7,642 crore. On the other hand, the induced economic impact stood at Rs 18,723 crore, affecting 1,481 jobs directly and impacting 6,831 people in total.

Industry sources suggest that the reality far exceeds these numbers. Close to 120,000 jobs were affected due to the closure (direct and indirect), said STR Thiagarajan, president, Thoothukudi Contractors Association. Take the case of Anthony Swamy from Abhinaya Transport, who used to have 170 tipper lorries in 2018, each of which used to run at least five trips a day from the Sterlite Copper unit, and used to earn Rs 300,000 a day at its peak. “There were 500 such lorries running in and out of the plant when the plant functioned. Now, from 170 tippers, I have lost everything and have only six such lorries,” Swamy said. Going by the thumb rule of two workers each, around 500 tippers created jobs for around 1,000 people, indicating that the CUTS International estimates may be conservative.

Thiagarajan explained how the shutdown turned out to be a blow to around 40 contractors of the unit. “In the last five years, all of us have been dependent on those who are suffering. Based on one estimate, at least 25,000 jobs were affected in the local economy. We had contractors on the production side, cleaning, house-keeping and for environmental-related work. We were earning around Rs 1,500 crore per year as payments from the unit. It is zero now. This is an evident economic impact in front of us,” he said. Immediately after the shutdown, the Thoothukudi port’s revenue took a 12 per cent hit. Its cargo traffic fell from 38.46 million tonnes (mt) in 2016-17 to as low as 31.7 mt in 2020-21, and is yet to recover at 34.1 mt in 2021-22 and 38.04 mt in 2022-23.

According to Sterlite Copper, the company is suffering a loss of Rs 5 crore on a daily basis. The larger economic loss is even more, from being a net exporter of 335,000 tonnes in 2017-18, India has become a net importer of copper since 2018-19, and incurred a deficit of $971 million in 2021-22 according to reports. Before the shutdown of the Tuticorin smelter, India exported copper worth $ 2.1 billion to China in 2017. The Thoothukudi unit in 2018 used to contribute to around 40 per cent of the country’s total copper smelting capacity and 95 per cent market share of sulphuric acid in Tamil Nadu.

The protestors, however, are of the view that the plant was violating environmental rules. Interestingly, the copper smelter shifted to Thoothukudi in 1996 after facing resistance at Ratnagiri in Maharashtra in 1994. In July 1997, a sulphur dioxide gas leak from the plant led to the hospitalisation of more than 90 people. Then in March 2013, then Chief Minister J Jayalalithaa had ordered the closure of the unit after people complained of eye irritation following another alleged gas leakage but it continued operations after getting a legal breather. In 2019, the Tamil Nadu government had informed the court that it has noticed more than 84 incidents of gas leaks from the plant since 2013.

“All the figures of job losses are inflated. Around 4,000 direct and indirect jobs were affected. The company did not follow any environmental or hazardous waste management rules. They did not remove copper slag for years and had huge metal condense inside the unit. It was degrading the water and air quality of the region and that is why the locals protested,” said Jim Raj Milton, a senior leader of People Right Protection Centre (PRPC) in Tamil Nadu, an NGO that was part of the protests against the Sterlite unit.

There are two sides to the issue now, one standing in favour of the environment and another for the economy. The people of Thoothukudi appear to be caught in the crossfire.

TIMELINE

• July 1997: More than 90 people are hospitalised after an alleged sulphur dioxide gas leak in the unit
• March 2013: The J Jayalalithaa government orders closure of the unit
• May 2013: The National Green Tribunal (NGT) overturns the order
• February 2018: Protests resurface after Sterlite announces plans to double the plant’s annual capacity to 800,000 tonnes
• May 22, 2018: Police firing kills 13 people and leaves 102 people injured during a protest
• May 24, 2018: Two days after the firing, the Tamil Nadu Pollution Control Board (TNPCB) orders closure of the unit with immediate effect and disconnects its electricity supply
• June 20, 2022: Vedanta comes out with an expression of interest for selling the Sterlite unit
• April 10, 2023: A three-member Supreme Court Bench, headed by the Chief Justice of India Justice D Y Chandrachud, allows Sterlite Copper to carry out maintenance works at its Thoothukudi plant
• May 5, 2023: The Supreme Court asks Tamil Nadu to take appropriate steps before June 1, to ensure implementation of its order on the maintenance of the plant