On 20 December, protests erupted at Thoothukudi in Tamil Nadu, demanding the reopening of the Vedanta’s Sterlite Copper Plant which was closed on the Tamil Nadu government’s order, which was supported by courts. Indian National Trade Union Congress (INTUC) staged the protest demanding to revive the copper plant along with other closed industries and provide relief from the widespread joblessness in the area.
While the closure of the copper plant has resulted in the loss of over 1500 direct jobs and over 40,000 jobs, the impact of the shutdown over alleged pollution is much bigger on the Indian economy. Notably, in just one stroke of a court order, India became a net importer of copper while it was a net exporter of the vital metal before the shutdown of the Sterlite Copper plant in 2018.
The closure of the Sterlite Copper plant had such widespread ramifications on the country’s copper trade that from being one of the top five exporters of copper cathodes in 2017-2018, India became a net importer beginning 2018-2019. Sterlite Copper accounted for roughly 38% of the country’s copper needs as the smelter produced nearly 4 lakh tonnes every year.
One of the most concerning developments as a result of the closure is that China has become a major beneficiary of the decision, as it is a major producer and exporter of copper. This has put a major blow on India’s Atmanirbhar Bharat campaign, as copper is a vital metal used everywhere like automobiles, electricals, and electronics.
The situation is expected to worsen in future, as demand for copper is set to rise due to rapid growth in several industries that use copper. As per estimates, copper demand will rise by over 9.3% annually to reach around 2.5 – 3.5 million metric tons by 2030. This demand is going to be fuelled by several industries, including renewable energy, electric vehicles, power grid expansion, rabid urbanisation etc.
As part of the Modi government’s push for solar energy, India will need around 1.5 million tonnes of copper by 2030 for solar and wind energy. Copper is essential in the production and transmission of electricity as it is used in equipment like alternators and transformers. It is also an essential metal used on solar photovoltaic panels.
There is no doubt that the world is moving towards an era of Electric Vehicles, and India will not be an exception. Electric motors require large quantities of copper, and therefore, the sector will account for huge copper demand. On average, an EV car has 83 kg of copper, while EV buses use, 224 kg of the metal. With the govt’s target of 30% EVs by the year 2030, the copper demand is set to soar.
Additionally, with the rapid urbanisation in the country along with initiatives like the Smart City project, copper demand will increase due to the increased use of electricity and various equipment. India plans to increase its power grid by 20% by 2030, and copper’s role in high-efficiency transmission is crucial. It is estimated that demand for copper in electrical infrastructure to hit 1.8–2 million tonnes by 2030.
As a whole, India’s per capita copper consumption is 1 kg now, which will reach 3.2 kg per capita by 2047. As per estimates, India needs 1 new copper smelter every 4 years, and reviving facilities like the Sterlite plant is important.
The shutdown of the plant created a vacuum in India’s copper production and transformed the nation from a net exporter to a net importer of copper. Before the plant’s closure, India exported around 50% of its copper output. With the Sterlite plant offline, India’s copper exports fell by 70%. For instance, exports dropped by 90% in 2018–2019, from 378,000 tonnes in the previous year to just 48,000 tonnes.
According to a report by CUTS International, the closure of the Sterlite plant cost India ₹14,749 crore, affecting the economy and copper supply.
Copper production is a high-return investment, with almost 400% return on investment. Therefore, domestic copper production can be a massive boost for the economy. On the other hand, importing copper means enriching other countries that export copper to India to fill the gap created by the Vedanta plant shutdown.
India’s loss is a gain for China, Pakistan and others
To meet domestic copper demand, India’s copper import increased by a huge margin, with the majority of imports coming from China. As a result, China’s copper exports to India have doubled, which was worth $340.12 million in 2023. India imported over 300 thousand tonnes of copper in 2023-24, with 363,000 tonnes of refined copper. Imports grew by 13% in just 2 years.
With India out of the picture as a major copper exporter, the global copper supply has become tighter. This allowed Chinese companies, with their robust manufacturing and smelting infrastructure, to secure better prices and terms.
China remains a major consumer of copper due to its dominance in the manufacturing sector, and other countries have benefited by taking India’s place in exports to China. This includes Pakistan, which took India’s place and its copper export to China was valued at approximately $752 million in 2023.
Another major beneficiary is Saudi Arabia, as Vedanta group has signed a MOU to invest $2 billion in major copper projects in the country. The company took the decision after the Supreme Court repeatedly rejected its pleas to reopen the Thoothukudi plant. The company plans to open a 400 KTPA greenfield copper smelter and refinery and a 300 KTPA copper rod project. Vedanta’s investment is expected to contribute $19 billion to Saudi Arabia’s GDP.
This shift of investment from India to Saudi Arabia is a significant setback for Tuticorin and India. Continuing the plant with adequate pollution control measures would have boosted the local economy, creating jobs and driving infrastructure development in Tamil Nadu.
Foreign hand
It has been alleged since the beginning that the anti-plant protest was foreign-funded, which was also alleged by Tamil Nadu Governor R N Ravi last year. Strikingly, it has also been alleged that Chinese companies which had an economic interest in Indian copper import were behind the protests that led to the closure of the plant. Vedanta Limited had told the Madras High Court that the Chinese companies promoted and funded the agitations and protests against Sterlite.
It has been alleged that the NGOs that led the protests against the Sterlite Copper Plant violated the Foreign Contribution Regulation Act (FCRA) by continuing to accept foreign funds even after the cancellation of their FCRA registrations. This includes Church groups Tuticorin Diocesan Association, Tuticorin Multipurpose Social Service Society, and preacher activists Mohan C. Lazarus and Henri Tiphagne.
The FCRA registrations were cancelled in 2015 based on adverse reports received from the intelligence agencies. Their bank accounts were also frozen. However it was alleged that they continued to receive foreign donations, violating the law.
