The industry is pushing for a Supreme Court review of the Sterlite Copper verdict

Even as Vedanta’s Sterlite Copper is expected to approach the Supreme Court with a review petition, the copper sector and its dependent industries are hopeful that the court will consider the current supply-demand situation in the country.

According to an estimate by the International Copper Association, India has not only lost nearly $1 billion a year in net foreign exchange inflows due to copper exports over the past five years since the plant closed, but also has to spend nearly $1 billion a year on $1.2 billion per year to import copper to fill the supply gap.

Moreover, at a corporate level, it is a huge loss for Vedanta. On the other hand, protesters say the Supreme Court is unlikely to reconsider its reopening.

“Sterlite’s vacuum is compensated by imports. The industry has adapted by importing copper, which can be expensive and has few logistical challenges. Not only copper production, but the closure of the Sterlite plant has also led to loss of production of several by-products including sulfuric acid,” said Mayur Karmarkar, Managing Director, International Copper Association India.

Demand for copper in India has grown significantly from 1.31 million tonnes (mt) in 2021-2022 to 1.52 million tonnes in 2022-2023. Karmarkar added that on the supply side, while the installed copper smelting capacity is 950,000 tonnes per annum, the current operational capacity is 500,000 tonnes per annum.

Similarly, the installed refining capacity is 985,000 tons per year, but the operational capacity is 785,000 tons per year. This results in a supply shortage and dependence on imports, mainly due to the closure of Vedanta’s copper smelter.

India was a net exporter of copper for almost two decades before the closure of the Sterlite Copper plant in Tuticorin. In 2018, India became a net importer of copper for the first time, and Southeast Asia, Japan and West Asia have emerged as new trading partner countries for India.

Impact on the ground

More than 400 downstream units, 40 contractors and even transport companies were affected by the unit closure in 2018.

“Downstream industries were hit hard. I bought their acid called fluorosilicic acid (a waste material), which was reportedly causing environmental pollution in the department. Both my company and Southern Petrochemical Industries Corporation depended on this plant for this acid. Now I have lost millions of rupees and had to transfer the unit to Odisha now after five years. Even equipment was a loss for me,” said NP Gopalakrishnan, a partner of Amrita Chemicals.

Amrita Chemicals converted fluorosilicic acid into sodium silicofluoride, which is used in industries such as glass, rubber and metal fluxes.

At its peak, Amrita Chemicals exported to several countries, and its domestic customers included PGP Glass (formerly Piramal Glass) and Borosil.

Take the case of the shipping and logistics sector.

Karthikeya Prabhu and partners used to run a company that was previously a supplier to the shipping and logistics industry.

“Our company had a turnover of Rs 150 crore before the shutdown. Now it came down to Rs 40-50 crore. It has affected the shipping and logistics sector in the area, which used to get orders worth Rs 500 crore per year from the unit,” Prabhu said. That company had to cut about 50 percent of its workforce.

According to 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 till May 2021 alone led to an overall economic loss of around Rs 14,749 crore, with the impact on government revenues of Rs 7,642 crore.

On the other hand, protesters are confident that the court will not reconsider the verdict.

“It is not an appeal. There is a small window of opportunity for Sterlite Copper as this is a second round of lawsuits. They must vacate the premises now,” said Jim Raj Milton, a senior leader of the People’s Right Protection Center in Tamil Nadu, an NGO that was part of the protests against the Sterlite unit.

Currently, India uses only 1 kilogram (kg) of copper per person per year, far below the global average of 3.2 kg, Karmarkar said. Industry experts believe that achieving the government’s Viksit Bharat and Amrit Kaal@2047 vision will significantly increase copper consumption, potentially bringing India close to the global average by 2047.

“Demand will be driven by private and public spending, private consumption and growth in the infrastructure, energy, construction, automotive and manufacturing sectors. Given the growing demand, Adani’s planned capacity expansion of 1 million tonnes over the next five years may not be sufficient for Atmanirbhar Bharat. Moreover, after 2029, at least 400,000 tons of capacity will be needed every five years,” he said.

It was in May 2018 that the Sterlite Copper unit was closed on the orders of the Tamil Nadu Pollution Control Board. This was after police fired on protesters, killing 13 people and injuring 102.

The protests were against Sterlite’s plans to double its annual capacity to 800,000 tons, which protesters say would have increased the toxic impact on the environment and health from the plant’s operations.

First print: March 28, 2024 | 8:35 PM IST