How prolonged closure of Sterlite plant is impacting copper exports

The prolonged closure of its controversial Thoothukudi plant has had an unintended impact on the country's exports of the industrial metal

It’s been three years since the police firing that killed 13 people and left 102 people injured during a protest against Sterlite Copper’s 25-year-old units at Thoothukudi. Since then, there’s been a long hiatus. In September, the Madras High Court, hearing a plea to make the National Human Rights Commission (NHRC) report on the incident public, termed the police firing against the protestors a “scar on democracy” and said the incident must not be forgotten.
 
It hasn’t been, at least in Thoothukudi, where locals are still struggling to come to terms with what happened on May 22, 2018 — such as Jesubalan, father of four, whose wife Jahnsi, delivering fish to a relative, died after being caught in the crossfire that day. Nor has there been reprieve for Sterlite Copper, a unit of Anil Agarwal’s Vedanta, which has been working hard to re-establish its credentials as a responsible manufacturer.
 
The second wave of the Covid-19 pandemic gave the plant a fresh lease of life. During the peak, it was reopened to produce oxygen for three months (April 27 to July 31), based on a Supreme Court order. “As part of the effort, we have been able to supply 2132 MT and 7833nm³ of high-purity, medical-grade oxygen to 32 districts in Tamil Nadu. We stand prepared to continue supporting the State, should the need arise,” a Sterlite Copper spokesperson told Business Standard.
 
As part of its corporate social responsibility mandate, the company planted one million trees, implemented a scholarship programme for students from Thoothukudi's villages, started skill-training programmes, provided drinking water facilities to 22 villages and helped expand the region’s hospital infrastructure during the pandemic by spending around Rs 2 crore.
 
None of this has regained the confidence of locals, although all of them (bar one person who died later) have received compensation, according to S Mohan, associate director of People’s Watch, a non-governmental organisation working in the region. The government moved one step ahead, too, by withdrawing the criminal cases against 84 people who were arrested, in addition to paying them Rs 1 lakh each.

Jesubalan, for instance, received Rs 20 lakh and a job for his elder daughter at the district education office. “After the incident, neither Sterlite nor any of its officials contacted us in the last three years,” he said.
 
In fact, locals still panic at the prospect of the plant being reopened. “Lots of lives were lost in the area. When it comes to reopening we all have only one voice, which is against it. So far, none of the culprits got punished, which is what we want. The only thing is that the immediate kin got jobs and we got compensation money,” said Jesu Rani, wife of Lourdhammalpuram resident K Glaston who lost his life in the incident.
 
Bringing the guilty to book is only one of the points of discontent. The long-standing pollution to the soil, water and air from the plant has not been conclusively addressed. Fisherfolk have been complaining of this problem since the 1990s. In July 1997, more than 90 people were hospitalised after a sulphur dioxide gas leak in the unit.
 
That was when the J Jayalalithaa government ordered the closure of the unit in March 2013. This was overturned by the National Green Tribunal (NGT) in May 2013. Following this, the plant was reopened. But the unrest did not die down. Protests resurfaced on a large scale in February 2018, when Sterlite announced plans to double the plant’s annual capacity to 8 lakh tonne, making it one of the world’s largest copper smelting units at a single location. This ultimately led to the May 22 firing incident.
 
Two days after the firing, the Tamil Nadu Pollution Control Board (TNPCB) ordered closure of the unit with immediate effect and disconnected its electricity supply. Against this, the company approached the NGT and got a favourable order in December 2018 directing the plant to be reopened. This was set aside by the Supreme Court in February 2019 on grounds that the matter did not come under the tribunal’s jurisdiction. In 2019, the Tamil Nadu government had informed the Madras High Court that it had noticed more than 84 incidents of gas leaks from the plant in 2013 alone, responding to a Sterlite plea challenging the order of closure of the unit.
 
The impact of this long hiatus has not been small on the country’s economy. India, which used to be an exporter of copper before the Sterlite unit shut down, has become a net importer now. Copper is used in electrical machinery, building, cabling for power and telecommunications, and automobile sectors.
 
In FY17, India exported copper worth $1.8 billion; that fell to $0.3 billion in FY2020. India now incurs an annual net foreign exchange outflow of $1.2 billion due to copper imports.
 
The three major players in India’s copper industry in India are Sterlite Copper, Hindalco Industries and Hindustan Copper. Sterlite alone accounted for around 40 per cent (400,000 MT) of the country’s total copper smelting capacity. According to industry sources, close to 120,000 jobs were affected due to the closure — including those employed in 400 small-scale downstream industries in the electrical, construction, chemical and automobile sectors, which were dependent on the Sterlite unit for products like copper, sulphuric acid and fluorosilicic acid.
 
Even though consumer demand is yet to pick up, copper demand has risen smartly. During the first quarter of the financial year 2021-22, copper imports shot up 26 per cent to 60,766 MT from 48,105 MT in the same period last year. The overall import of refined copper during the last financial year was 233,671 MT. The import figure for this financial year is expected to clock between 295,000 and 304,000 MT, a significant jump from the past year, based on industry estimates.
 
Copper demand in India is expected to grow 10-12 per cent in FY21-22. India’s solar power generation capacity is close to 40,000 Mw, which alone req­u­ires over 332 million pound (15 lakh tonnes) of copper according to industry estimates. With the country betting big on expansion in the solar segment, imports are expected to increase further in the coming days raising concerns among the industry players.
 
Closing a plant for environmental concerns, just as it may have been in a position to service India’s climate change targets, must be one of the biggest ironies of Sterlite Copper’s closure.