After the Supreme Court dismissed the plea moved by Vedanta group to reopen its Sterlite copper smelter plant in Tamil Nadu last month, the mining conglomerate is planning to file a review petition. As Vedanta Group is likely to file a review petition in the Supreme Court, the copper and dependent industries are hoping that the apex court will consider the demand-supply situation in the country.
According to the International Copper Association, over the last five years since the plant’s closure, India has lost nearly $1 billion per year in net foreign exchange inflows from copper exports, while also spending nearly $1.2 billion per year on copper imports to fill the supply gap. Furthermore, at the corporate level, it is a significant loss for Vedanta. On the other hand, demonstrators believe the Supreme Court is unlikely to rethink its reopening, Business Standard reported.
Notably, India’s copper demand has grown significantly, rising from 1.31 million tonnes (mt) in 2021-22 to 1.52 mt in 2022-23. India’s copper demand has grown by 16% in the fiscal year 2023.
Industry experts say that Sterlite’s vacuum is being compensated through imports, causing huge outflow of foreign exchange. International Copper Association India data suggests that a constrained refined copper capacity in FY23 resulted in a surge in Copper cathode net imports by 180%. Moreover, the usage of secondary copper grew by 22% in the last financial year.
“Sterlite’s vacuum is being compensated by imports. The industry adjusted by importing copper, which may be expensive and have few logistic challenges. Not only copper production, but the Sterlite plant shutdown has also led to a loss of production of various by-products including sulphuric acid,” Mayur Karmarkar, managing director, International Copper Association India told Business Standard.
The ICAI managing director added that even though the installed capacity of copper smelting is 950,000 tonnes per annum, the current operational capacity is 500,000 tonnes per annum.
Similarly, the installed refining capacity is 985,000 tonnes per year, however, the operational capacity is 785,000 tonnes. This is causing a supply deficit and reliance on imports, owing to the closure of Vedanta’s copper smelter.
Prior to the closure of the Sterlite Copper manufacturing plant in Tuticorin, India was a net copper exporter for nearly two decades. For the first time in 2018, India became a net copper importer, and new trade partners for India include Southeast Asia, Japan, and West Asia.
As per a study conducted by research and advocacy firm CUTS International (Consumer Unity & Trust Society) with funding from NITI Aayog, the closure of the Sterlite Copper unit resulted in an overall economic loss of approximately Rs 14,749 crore until May 2021 alone, with an impact on government revenues of Rs 7,642 crore. Furthermore, the net loss of employment (both direct and indirect) totalled nearly 30,000 jobs.
“Thus, through the data collected and analysed for the purpose of this report, the consolidated loss to the economy owing to closure of the Copper Plant on all stakeholders is estimated to be around Rs. 14,749 crore since its closure in May 2018. The cumulative loss for the entire period of plant closure is roughly around 0.72% of the State Gross Domestic Product (SGDP) of Tamil Nadu,” the CUTS report states.
Notably, the unit’s closure in 2018 affected over 400 downstream units, 40 contractors, and even transport businesses.
“The downstream industries got affected a lot. I was buying their acid called fluorosilicic acid (a waste material), which allegedly caused environmental pollution at the unit. Both my company and Southern Petrochemical Industries Corporation were dependent on this plant for this acid. Now, I have lost crores of rupees and had to shift the unit to Odisha now, after five years. Even equipment was a loss to me,” said N P Gopalakrishnan, a partner of Amrita Chemicals which used to convert fluorosilicic acid into sodium silicofluoride, which is used in industries including glass, rubber, and metal fluxes.
Notably, on May 22, 2018, a tragic incident occurred where at least 13 individuals lost their lives, and many others were injured as the police fired upon a large gathering protesting pollution allegedly stemming from the copper smelting unit. Responding to the violent protests regarding pollution concerns, the Tamil Nadu government, on May 28, 2018, directed the state pollution control board to seal and “permanently” close the mining group’s plant.
However, the domestic copper production is set to recover with the commencement of operations at Kutch Copper, the copper greenfield copper refinery of Adani Enterprises in Mundra. The plant is starting with a capacity of 0.5 million of tonnes per annum (MTPA). The capacity will be doubled in the second phase, after which it will become the world’s largest single-location custom smelter. As per the company, the plant boasts cutting-edge technology and digitalization while adhering to exemplary environmental, social, and governance (ESG) standards. At present the only major copper producer in India is KM Birla promoted Hindalco Industries.
