The Sterlite Copper unit led to pollution fears, protests.
The Tamil Nadu government’s decision Monday to shut down Vedanta Limited’s copper plant at Tuticorin, which accounts for a 40 per cent share in India’s annual copper production of 10 lakh tonnes, could have a downstream impact on around 800 small and medium units in the electrical sector.
These include cable manufacturers, winding wire units and transformer manufacturers who source from the Tuticorin unit of Sterlite Copper — most of these units are in the country’s western and northern regions.
The shutdown is also likely to impact India’s copper exports as around 1.6 lakh tonnes of Tuticorin plant’s production is sold internationally. Ratings agency ICRA, in an April report, has said that the consumption of copper in the country has been increasing steadily over the past five years and at a current local demand growth of 7-8 per cent per year, India is projected to turn into a net importer of the metal by the year ending March 2020 if no new plant is commissioned. The shutting down of the Tuticorin smelter could potentially advance this projection.
Currently, three major players dominate the Indian Copper Industry. Hindustan Copper Limited (HCL) is a central government public sector unit and it has the capacity to produce 99,500 tonnes of copper per year. Hindalco Industries and Sterlite Copper are private sector companies that can produce 5 lakh tonnes and 4 lakh tonnes of copper annually.
India’s copper industry produces around 10 lakh tonnes per annum of refined copper. Around 40 per cent of the industry’s production is exported, mainly to China. For Sterlite Copper, specifically, exports contributed 41 per cent of overall sales for 2016-17. “The shutdown of the Tuticorin plant could lead to direct and indirect job losses of up to 50,000,” the source added.
Violence broke out on May 22 during protests demanding the closure of the factory over pollution concerns and police opened fire, resulting in the death of 13 people. (File)
“Closure of Sterlite Copper plant is an unfortunate development, especially since, we have operated the plant for over 22 years in most transparent and sustainable way, contributing to Tuticorin and (the) state’s socio-economic development. We will study the order and decide on the future course of action”, Vedanta Limited said in a statement on Monday.
On May 3 this year, Kuldip Kaura, Chief Executive Officer (CEO), Vedanta Resources said during an analyst conference call: “Copper India business recorded a production of 4,03,000 tonnes this year (2017-18)…Our operations at Tuticorin are currently shut down as our application renewal of the consent to operate has not been approved…we have engaged with the authorities with the responses to some of the questions which they raised and we believe the resolution for this should happen soon.”
Sources said the company had expected that the plant’s expansion plan, underway and which envisaged a doubling of the capacity, would get the requisite clearances in a few months.