Sterlite Copper plant: Chronology of agitation, appeals, court rulings; 5 steps to tackle the situation

November 18, 2021 8:28 AM

Copper is a critical raw material and enabler in diverse industries. Key consumers are the electrical industry and telecommunication

Public Sector Undertaking Hindustan Copper owns and manages The Gujarat Copper Project at Bharuch, Gujarat (Photo: Express Photo)

By R. Chandra Mouli

Very much like the Sensex, the price of copper has seen a steady rise. Investors cheer when the index peaks. Nation sheds forex tears when a precious metal has to be sourced from overseas. Self-sufficiency to net importer, challenger to laggard, proud producer to frenzied buyer is the long and short of India’s copper story. Yes, we have smelters, of course we produce copper, but all this came a cropper when the biggest of them all shut shop, which some say is for ever while others hope for a revival.

Even as I pen this article, my heart grieves for lives lost in the Sterlite Copper agitation during 2018. I empathize with every livelihood shattered since that fateful day, and by that I mean the extended family of plant employees, vendors, business partners and community members who propelled the smelter’s success for over 25 years.

It is said that behind every simmer of protest there is an unseen hand, behind every uprising there is a motive, and behind a ruined future there is a sinister smile. What made Sterlite Copper a target? How did a plant that had a smelting capacity of 400,000 tpa, and according to its management had adhered to pollution control norms, get tainted? What could have been the benefit for aggressors?

The answer can be found, not in reams of reports, not in the findings of inquiry committees but in the price of copper today. The metal now costs Rs. 735 per kg, almost 50% higher than the plant’s pre-closure price.

It is axiomatic that in a game, when a player loses, another gains. India lost the supply from a major producer, and many countries gained in the process. According to a CARE Rating 2019 report, India imported refined copper from Japan (71%), Congo (6%), Singapore (5%), Chile (4%), Tanzania (4%), UAE (4%) and South Africa (3%).

Copper is a critical raw material and enabler in diverse industries. Key consumers are the electrical industry and telecommunication, followed by transport, consumer durables, building and construction, and engineering goods. Copper is used in various components including motors, wiring, radiators, connectors, brakes and bearings.

Let’s take one step back and plot India’s current smelter map. Takes just a few moments, since all we have is the following:

– Hindalco, part of the Aditya Birla Group, operates the Birla Copper smelter in Dahej, Gujarat.
– The Vedanta Group operates a Refinery and two Copper Rod plants at Silvassa, in Western India.
– Public Sector Undertaking Hindustan Copper owns and manages The Gujarat Copper Project at Bharuch, Gujarat.

-If that’s the end of the story, I owe you an explanation of its attendant woe. According to UK-based research firm Roskill, following the closure of Sterlite Copper in May 2018, “domestic production of refined copper dropped by 45% to 454kt in FY19, and in April-Dec FY21 production totalled 232kt. The loss of 400ktpy of capacity has led to India becoming a net importer of refined copper.”

As per data published by Govt. of India, the import of refined copper increased to 92,290 tonnes in 2018-19, from 44,245 tonnes in 2017-18 while exports declined to 47,917 tonnes in 2018-19 from 3.78 lakh tonnes in 2017-18. This resulted in net import of 44,373 tonnes in 2018-19 from net exports of 3,34,310 tonnes in 2017-18.

Prior to the shutdown of the Sterlite Copper’s Tuticorin smelter, India exported copper worth USD 2.1 billion to China in 2017, which dropped to $532 million by 2020. During the same time, exports of copper to China from Pakistan and Malaysia increased by over $2 billion from 2017 to 2020.

Adding to conundrum is the increase in lead time for import. One end user conveyed that a two-day wait has now increased to over three weeks, which leads to blocking of capital and makes the importer susceptible to currency fluctuations.

Beyond supply chain challenges, the socio-economic fallout is daunting. The Sterlite Copper plant had provided direct and indirect employment to over 20,000 people, supported over 400 downstream industries with a combined workforce of almost 100,000, and ensured a means of employment to more than 12,000 in the logistics industry.

The irony is in the environmental damage the plant is said to have caused. Independent studies conducted after the closure point to confabulation and contradiction. Newspaper reports published one year after the shutdown said the air quality remained unchanged. Here I quote the Times of India, Dec. 5, 2019:

“Air quality in Tuticorin has remained unchanged, even a year after Sterlite smelter closure on charges of pollution to air, soil and water. The air quality as measured by sulphur dioxide or SO2 and Nitrogen Oxide or NOX has remained constant. Data obtained from an RTI from Tamil Nadu State Pollution Control Board (TNPCB) showed that SO2 levels as captured by TNPCB’s monitoring stations in Fisheries College (closest to the now defunct smelter) were 12 micrograms per cubic meter in 2018-19 from 13 earlier. The readings of NOX remained unchanged between 2017-18 and 2018-19 at 10 micrograms per cubic meter.”

A public information campaign (#KnowtheTruth) by Sterlite Copper published after the plant closure unravels their side of the story – the smelter management says they do not pollute ground water, 70% of water consumed is from their own de-salination plant, the copper plant is a zero liquid discharge unit as per a 2011 NEERI report, Forest Research Institute bio-diversity study finds nil impact on marine life in a radius of 10 km, sulphur di-oxide emission is less than stipulated norms, and SO2 emission is just 1% of total emission in Tuticorin.

Before I summarize, let’s understand the status quo of closure of the Tuticorin plant which is insisted upon by one segment, while re-opening is sought by some sections of the society. For a 360 degree perspective, let’s retrace the chronology of events from the early days to agitation, appeals and court rulings.

– 1997: Sterlite Copper commences operations as a copper smelter at SIPCOT Industrial Complex in Tuticorin. Associated facilities include refinery and copper rod plant, sulphuric acid plant of more 1.2 million tonne per annum (tpa) and a phosphoric acid of unit with a capacity of 220,000 tpa.
– March 2018: Plant shut for maintenance and pending a renewal of licence.
– May 22, 2018: Police open fire on a gathering of over 20,000 protesters near the Thoothukudi Collectorate, leading to 13 fatalities.
– May 28, 2018: Govt. of Tamilnadu directs Tamilnadu Pollution Control Board to seal Copper Smelter Plant 1.
– August 17, 2018: Madras High Court rejects a plea by Sterlite Copper for reopening of the Tuticorin plant.
– December 15, 2018: National Green Tribunal (NGT) sets aside the Tamilnadu Government’s order for shut down of the plant, stating the closure was non-sustainable and unjustified.
– February 18, 2019: The Supreme Court sets aside NGT’s order on grounds of maintainability. Sterlite Copper is permitted to approach the Madras High Court with a writ petition challenging the impugned orders and seeking interim relief.
– Aug. 18, 2020: The Madras High Court dismisses the plea challenging the closure of Sterlite Copper smelter plant in Tuticorin and refuses to allow its reopening.
– Dec. 2, 2020: The Supreme Court rejects a proposal made by Vedanta to operate its closed Sterlite Copper plant in Thoothukudi for 30 days under the supervision of an expert committee appointed by the court.
– Jan. 22, 2021: The Supreme Court refuses to recall its order rejecting Vedanta’s interim plea to reopen its Sterlite Copper smelting plant.

The chronology of events reveals the appellant, Sterlite Copper, has not got any significant relief till date and the plant remains shut (except for a temporary reopening for production of medical oxygen during the peak of the pandemic).

Meanwhile, the Vedanta Group has floated an Expression of Interest to States of India for setting up a Rs. 10,000 crore smelter in a coastal location, and another industrial conglomerate has entered the fray to set up a greenfield smelter. It is likely then, just as water finds its own level, market forces may engineer the setting up of smelters in alternate locations.

If that happens, either Tuticorin will be relieved of its Damocles Sword as claimed by some residents and activists, or, the permanent closure of an economic treasure trove may reduce its sheen as “Pearl City.”
A recap of the Sterlite saga will not be complete if I do not bring to bear some key observations by independent bodies:

NITI Aayog, the central government’s apex thinktank, announced in February 2021 that it has commissioned a study that seeks to examine the “unintended economic consequences” of judicial decisions that have hindered and stalled big-ticket projects on environmental grounds. Interviews would be conducted with people affected by the closure of projects, environmental campaigners and experts, and an assessment would be made on the business impact of closure. Sterlite Copper features in the list of projects mentioned in the study.

CUTS (Consumer Unity and Trust Society) Centre for Competition, Investment and Economic Regulation which analysed the issue on behalf of Niti Aayog, states in an article contributed to the Economic Times that in the maxim “People, Planet and Profit,” ‘people’ continue to be ignored as we fail to understand that economic dimensions are equally important for intergenerational equity, as is clean air to breathe. Citing the case of Deepak, a former contract worker at Sterlite Copper, CUTS says he works at 10% of his prior salary, and if the situation continues he may breathe cleaner air but may not lead an equitable life.

The CUTS article contributors say: “Technology has advanced so much that solutions to deal with environmental burdens can be found and implemented easily. As a proper remedy, the judiciary should ask the businesses to respond accordingly rather than to tell them to stop their operations.”

In summary, closure of the Sterlite plant has led to loss of livelihoods, change in balance of payments and tables turning on India for the first time in two decades. As a concerned citizen and columnist, I now take the liberty of presenting a solution, rather a set of steps to set right the complex situation.

1. Seek public opinion: The Govt. of Tamilnadu may invite views from the entire ecosystem that has either caused the shutdown of the plant, or been affected by the closure – environmentalists, displaced Sterlite employees and vendors, members of the Tuticorin community, MSMEs, manufacturing giants, industry bodies and metal export / import forums.

2. Online Survey: A swift and effective route to gather public opinion could be an Online Survey with a five-day window to respond.

3. Re-start dialogue: Based on the feedback gathered in the Survey, talks can be resumed with the smelter management. An independent study can be initiated to check if the plant had indeed flouted pollution norms during operation; if earlier data or reports are disproved, initiate a fresh review with pollution monitoring agencies and the courts.

4. Connecting with the Community: In its plant locations across India, the Vedanta Group is known for community care and creation of infrastructure for education, healthcare and housing. Whether the smelter is re-started or not, their affinity to the people of Tuticorin and the district will never wane, and I am sure they will continue to engage with the community with welfare projects such as ‘Muthucharam’ which was initiated a few years earlier in the district.

5. Set CSR Goals: If a restart plan emerges with official sanction, specific CSR goals can be set for Sterlite Copper, with the ultimate aim of Muthucharam (string of pearls) transforming Pearl City into a model city.

Three years after the shutdown, a question may arise as to which is the best decision to be taken, given the unique circumstances and divergent viewpoints. Though it’s a case where both choices are unacceptable, and the ultimate decider faces the inevitable “damned if you do, damned if you don’t,” inaction cannot be an option.

It’s time for all concerned to come together and prove we care more than a nickel and dime to protect the scarce metal, and the community that once thrived in its production.

(R. Chandra Mouli is a communications specialist, columnist and former journalist. Views expressed are the author’s own.)

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