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Shutting Sterlite plant will hit 30K jobs: CEO

The decision of the Tamil Nadu government to shut the copper smelter plant in Tuticorin would have serious economic ramifications by pushing India’s annual import bill by an estimated $2 billion, said P Ramnath, CEO, Sterlite Copper.

Shutting Sterlite plant will hit 30K jobs: CEO

New Delhi

“The sudden decision of Tamil Nadu government to close down our copper smelter in Tuticorin will have far reaching ramifications for the economy of not only the town and its adjoining villages but also the country,” Ramnath said in a statement.

“While an estimated 30,000 direct and indirect jobs are now on the line, a large number of small to medium enterprises that are dependent on our smelter for copper are also likely to suffer due to supply disruptions. Since Vedanta Sterlite is one of the largest copper producers in the country, manufacturers in sectors ranging from electrical to defence will have to turn to imports and that will push up the nation’s annual import bill by an estimated $2 billion based on the current price,” he added.

In a second successive blow to Vedanta Ltd, the State Industries Promotion Corporation of Tamil Nadu Ltd (SIPCOT) on Tuesday cancelled in “larger public interest” the land allotted in Thoothukudi for the expansion of Sterlite Copper’s smelting plant.

The Vedanta copper smelter serves over 800 small and medium enterprises (SMEs) in the downstream industry for the critical electrical sector. The bulk of supplies to the electrical sector are to units in northern and western regions.

In its letter to Vedanta, the SIPCOT cited the public protests against the plant’s expansion on grounds of increased pollution and expressed concerns over pollution caused by the first smelter plant.

The government agency said the price of 342.22 acres deposited will be refunded as per the norms.

On Monday, the government issued orders to close Vedanta’s first copper smelter unit, whose capacity is 400,000 tonne per annum. The Tuticorin facilities include a custom smelter, a refinery, a phosphoric acid plant, sulphuric acid plants and a copper rod plant. In addition, there is a captive power plant located in Tuticorin and a refinery and two copper rod plants operating in Silvassa, western India.

The closure order came after a total of 13 persons were killed in police firing on May 22 and the next day in protests in Thoothukudi against the continued functioning of the unit.

In November 2017, Vedanta said its board approved the expansion of its copper smelter to 800,000 TPA with a capex of $717 million, of which $141 million had already been spent.

Cloud of uncertainty

At current local demand growth of 7-8 per cent per year, India may turn into a net importer of copper by the year ended March 2020 if no new plant is commissioned, consultancy firm ICRA Ltd had said in a recent report 

Vedanta’s foray into copper was not only a matter of pride for TN but was set to boost India’s status in the important metals market as well. Its economic impact on the supply chain and the downstream industries is huge. Copper demand was expected to grow at 9-10 per cent, ahead of the economic growth in India 

Vedanta claimed to have a 36% market share in domestic copper industry

Factors driving high demand

  • Investment in infrastructure projects 
  • Growing power generation capacity 
  • Ongoing urbanisation 

Import-driven business

  • Industries have had to bear the brunt in terms of cost for using copper such as mobiles, electrical parts, refrigerators, washing machine 
  • Direct impact on India’s supply chain given the offtake volume of 10 to 15 per cent
  • Over 800 SMEs in the downstream industry for the critical electrical sector 
  • Vedanta’s Indian facilities included a custom smelter, a refinery, a phosphoric acid plant, a sulphuric acid plant and a copper rod plant 
  • It had three captive power plants located in Thoothukudi, a refinery and two copper rod plants operating in Silvassa
  • Vedanta’s copper smelter in India recorded highest-ever production and the best-in-class operational efficiencies in the year
  • The full year copper cathode production at Thoothukudi stood at a record at 402,000 tonnes
  • Major supplier to the defence sector 
  • The company claimed that after completion the project will make Thoothukudi as one of the world’s largest single-location copper smelting complexes.

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