On Monday, December 2nd, Vedanta Copper International, a 100% subsidiary of Vedanta Ltd, signed a Memorandum of Understanding (MoU) with the Kingdom of Saudi Arabia’s Ministry of Investments and Ministry of Industries and Mineral Resources. As per the reports, this arrangement aims to invest $2 billion in major copper projects, encompassing a 400 KTPA greenfield copper smelter and refinery and a 300 KTPA copper rod project. Notably, these projects are scheduled to be established in Ras Al Khair, an industrial city in the Kingdom.
“These initiatives support Saudi Arabia’s ambitious Vision 2030, which endeavors to unlock an estimated $1.3 trillion in mineral resources and elevate the minerals sector’s GDP contribution from $17 billion to $64 billion by 2030. Currently, the Kingdom’s copper demand is around 365 KTPA, a figure anticipated to more than double by 2035, primarily met by imports at present,” the official statement by Vedanta Copper International read.
It further added that the recent visits by senior officials from the Kingdom’s Ministry of Mines and the National Industrial Development Centre to Vedanta’s operations in India have laid a solid foundation for further high-level discussions, progressing as planned.
Chris Griffith, the Chief Executive Officer of the Base Metals at Vedanta Limited commented on the matter and stated that the projects would enhance the Kingdom’s self-reliance in the copper supply chain. “We are thrilled and truly honored to collaborate with the Kingdom of Saudi Arabia in its Vision 2030 initiative. Our projects will enhance the Kingdom’s self-reliance in the copper supply chain. Saudi Arabia has been a leader in oil exploration and hydrocarbons for decades. Now, under visionary leadership, it is poised to tap into its vast, unexplored mineral potential, as it embraces the 4th Industrial Revolution,” he was quoted as saying.
The said agreement is also slated to provide employment for thousands of people and facilitate development for hundreds of downstream industries. However, it is crucial to note that the said agreement seems to be a strategic move from the company’s point of view. But from the point of view of the national development, it marks a downgrade.
Vedanta’s copper plant was shut down in India’s Thoothukudi
In the year 2018, the Vedanta-owned Sterlite copper plant had been shut in the Thoothukudi region of Tamil Nadu. The plant was shut after massive protests erupted in the region claiming that the project was disturbing the environment in the region. However, later in the year 2021, the workers led another protest demanding the reopening of the plant claiming that their only source of livelihood was taken away by the stoppage of the plant.
Some of the locals claimed that a few strangers entered their village and began planned propaganda against the Sterlite plant. They claimed that the project was causing harm to the environment and that it needed to be closed at any cost. They stated that they were played by strangers in the name of protests. The protests were reportedly organized by an NGO named The Other Media which has been accused of misusing foreign funds to organize protests around the Vedanta Sterlite copper plant in Thoohtukudi district of Tamil Nadu. The NGO since then has been placed under the scanner by the Home Ministry.
The shutdown of the Sterlite Copper plant dealt a huge blow to the country’s copper trade and India slipped from being one of the top five exporters of the copper cathodes in 2017-2018 to become a net importer since 2018-2019.
Recently, in March this year it was reported that 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 too.
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 a huge outflow of foreign exchange. 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.
