Sterlite Copper plant closure hits economy

Vedanta unit is one of the three primary copper producers in the country. It has a market share of 35 pc. The other two are Hindustan Copper Limited and Hindalco Industries Limited. Public Sector Units (PSU) cater to only 4 pc of the country’s total copper production.

After the closure of the Sterlite Copper plant at Thoothukudi the demand for copper is growing rapidly. The shutdown of the plant has led to rise in import of copper worth USD 2 billion and export loss of over USD 1.5 billion, resulting in an overall loss of INR 200 billion to the economy, Sterlite Copper CEO P Ramnath said.

Before the closure, the company was supplying 250,000 tonne per annum of copper to the domestic market and “most of the customers have to import now”, he added. The company exported around 150,000-160,000 tonne of copper per annum before the company shutdown. He further said that the closure has also resulted in steep rise in prices of sulphuric acid and phosphoric acid. Post shutdown, prices of sulphuric acid have spiked from INR 4,000 per tonne to INR 15,000 per tonne.”The price of phosphoric acid has also increased by 20-25 pc.”

Rating agency ICRA has also said that, “India may become a net copper importer by the end of financial year 2019-20 if domestic demand for non-ferrous metal grows at 7-8 pc.”

ICRA said in its report: “The scope of increasing copper production in India is limited as the refiners are already running their plants at high capacity utilisation levels. Hence, with demand increasing at a healthy rate, India may turn into a net importer of copper by FY 2020 if no new plant is commissioned in this period.”

Vedanta unit is one of the three primary copper producers in the country. It has a market share of 35 pc. The other two are Hindustan Copper Limited and Hindalco Industries Limited. The PSU cater to only 4 pc of the country’s total copper production. Sterlite Copper and Birla Copper (a division of Hindalco Industries of the Aditya Birla group) rely fully on imported copper concentrate for their requirements.

Jobs getting affected

Following the closure nearly 30 pc of employees who were working in electrical and electronic equipment manufacturing units are now facing the threat of losing their jobs due to shortage of the metal. Sterlite industries used to supply nearly 30 pc of copper to such small scale units.

“Today, we are in severe crisis and need an alternative source as importing it is too expensive,” said Hemanth Mehta, Treasurer, Copper Consumers’ Association of South India (CCASI). The Association has around 75 units employing around 20,000 people. The Sterlite unit accounted for almost 40 pc of the country’s total production. The small and medium copper consuming units in the south depended on the Sterlite unit for their copper needs, he said. Medium and small industry players use copper as raw materials to produce products such as copper alloy sheets, strips, foils, tubes, pipes and rods.

“We are not here to debate whether the decision to close down the plant was right or wrong. We want a solution to the problem of shortage,” Mehta told newspersons.

The fate of the plant

Industry body Non-Ferrous Metal Manufacturers Association (INFMMA) has urged the Centre to take steps for resumption of operations at Sterlite Copper plant. Members of INFMMA have also submitted a memorandum with the Mines Ministry and NITI Aayog, the association said in a statement.

With the ongoing shortage of copper in the market, stakeholders will have to buy copper at much higher price in order to keep their operations going.

On August 10, the National Green Tribunal (NGT) allowed Vedanta to enter its administrative unit inside its copper plant, observing that no environmental damage would be caused by allowing access to the administrative section.

However, the plant would remain closed and the company would not have access to its production unit and directed the district magistrate to ensure this, said a bench headed by chairperson AK Goel.

“The district magistrate will ensure that the appellants do not have access to the production unit. We are concerned with the environment. No environmental damage can be caused by allowing access to the administrative section,” the bench said.

Copper concentrate is being imported from countries (with rich copper reserves) such as Chile, Indonesia, Australia, Peru, Canada and the like. Sterlite and Birla Copper together import around 2.5 million tonnes concentrate.

The Tamil Nadu government had ordered for the permanent closure of the plant after 13 people among protesters were killed in police firing while demanding its shutdown on environmental concerns in May.