BL Explainer

Is Vedanta group selling the Sterlite Copper refinery at Thoothukudi?

Yes, the Vedanta Group has decided to sell its plant in the port town of Thoothukudi in southern Tamil Nadu. The company in conjunction with Axis Capital has issued an Expression of Interest (EoI) for the sale. The last day of submission of bids is July 4. The sale includes the smelter complex (primary and secondary); sulphuric acid plant; copper refinery; oxygen generation unit and residential complex with amenities, the EoI says. The Tuticorin plant has played an integral role towards India’s self-sufficiency in copper. In the best interest of country and Tamils, and options are being explored to make sure that the plant and the assets are best utilised to meet growing demand, the company said.

Why this sudden move?

While Vedanta’s move to sell the unit has taken many by surprise, it has been a bumpy ride for Sterlite ever since it entered Tamil Nadu in 1994. It has been accused of polluting the environment and the factory was closed several times. It had to seek legal remedy each time to re-start its operations. In fact, the Supreme Court had once fined the company ₹100 crore for violating the norms but allowed it to re-open the plant. The company, for its part, has been maintaing that the smelter plant was one of the safest. The SO2 to SO3 conversion in the sulphuric acid plant is at 99.9 per cent, the second best in the world. The plant has adopted all international norms and used the right technologies. The company blamed `external forces’ opposed to the expansion for creating problems. In the last one decade the company has been facing a losing battle with stiff opposition not only from people but also the State government – interestingly both the DMK and AIADMK governments are for once on the same page in opposing the plant’s reopening. The move to sell the plant could be due to various judgements that has gone against it and also lack of support from the local government and people.

What is the status of the group’s legal challenge against the closure of the unit?

The case is in the Supreme Court which is yet to hear an appeal filed by natural resources company Vedanta Ltd against the Madras High Court’s refusal in August 2020 to re-open the Sterlite Copper smelting plant. The legal battle in the Madras High Court was over the closure of the plant due to protests in Thoothukudi after the company got approval to double its smelter capacity to 8 lakh tonnes. The Madras HIgh Court recently ordered one month’s notice to the Tamil Nadu Pollution Control Board on a PIL petition seeking to order the demolition of the copper smelting unit of Sterlite.

What was Sterlite Copper’s contribution when in operation

Till the plant was closed in May 2018, it was contributing to nearly 40 per cent of India’s copper demand and contributed around ₹2,500 crore to the exchequer. Further, it provided 12 per cent of Thoothukudi port’s revenue and had 95 per cent market share for sulphuric acid in Tamil Nadu. Importantly, the plant provided direct employment to 5,000 people and another 25,000 indirectly through the value chain. Having invested over ₹3,000 crore in the plant, the company has lost over ₹4,000 crore since its shutdown. The plant has an installed capacity of 400,000 mtpa of integrated copper smelter and refinery, with another 400,000 mtpa under expansion. The plant facilities include refinery, copper rod plant, 160 mw captive power plant, sulphuric acid plant from (with technology from Chernetics, Canada), phosphoric acid.

Published on June 20, 2022