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Sterlite Copper plant in Tamil Nadu is back in the spotlight

The DMK government in Tamil Nadu is under pressure to reopen the Sterlite Copper plant in Thoothukudi, more than three years after its closure, as copper imports mount and prices of the metal rise in the face of a domestic production shortfall.

October 21, 2021 / 03:56 PM IST
Representative image of copper production (Source: ShutterStock)

Representative image of copper production (Source: ShutterStock)

Five months after the Dravida Munnetra Kazhagam (DMK) returned to power in Tamil Nadu, pressure is mounting on Chief Minister M.K. Stalin to reopen the shuttered Sterlite Copper plant in Thoothukudi as imports mount and prices rise.

Fisherwomen from coastal hamlets in the region have submitted a petition to district collector K. Senthil Raj demanding the reopening of the plant, which closed in May 2018 after police firing on protestors demanding its closure left 13 people dead. More such petitions have reached the district collector.

To be sure, anti-Sterlite activists, too, have been vociferous in demanding permanent closure of the plant, which its owner Vedanta has claimed provided direct and indirect jobs to around 20,000 people. Protestors say the plant polluted the environment and harmed the health of residents in its vicinity.

The safety of the people living in the region cannot be compromised, said G Stephen, a resident of Thoothukud who once was employed at the plant.

The Thoothukudi Contractors' Association is campaigning for the factory to be reopened. The copper smelter had been in existence for 22 years before it was shut, said V Kannan, president of the association, adding that the government could put in place stricter pollution control norms and monitor the plant's compliance with the standards.

With the DMK’s return to power in May following the Tamil Nadu assembly elections, the Sterlite Copper plant and the rival demands for its reversal and permanent closure haves returned to the political and business centre stage of Tamil Nadu.

Although Prime Minister Narendra Modi swears by Aatmanirbhar Bharat (Self-Reliant India), copper supply, characterised by rising imports and declining exports, is emerging as one of the challenges to his vision.

In a written response in the Lok Sabha in March, Minister of Mines, Coal and Parliamentary Affairs Pralhad Joshi informed the House that India’s imports of refined copper had more than tripled between 2017-18 and 2019-20. Exports declined by over 90 percent during the period, he said.

Impact of Sterlite closure, global outlook 

According to Joshi, refined copper imports increased from 44,245 tonnes in 2017-18 to 92,990 tonnes during 2018-19 and 152,000 tonnes in 2019-20. Exports declined from 378,000 tonnes in 2017-18 to 47,917 tonnes in 2018-19 and 36,959 tonnes in 2019-20, he said.

“Consequently, there was a net import of 44,373 tonnes and 115,005 tonnes in 2018-19 and 2019-20, respectively, against net exports of 334,310 tonnes in 2017-18,” the minister said.

Joshi said the closure of the Sterlite Copper Plant in Thoothukudi had affected the domestic production of refined copper. Joshi said copper production in the country, as a result of the Sterlite Copper Plant’s closure, dropped to 410,000 tonnes in 2019-20 from 830,000 tonnes in 2017-18. Refined copper output in 2018-19 was 450,000 tonnes.

Commodities Research Unit (CRU) has predicted that global copper production would drop from the current 20 million tonnes to below 12 million tonnes by 2034. In its view, over 200 copper mines are expected to run out of ore before 2035. There aren't enough new mines in the pipeline to take their place.

Some of the largest copper mines appear to be caught in a bind. On the one hand, their reserves are dwindling and on the other, they are forced to cut back on the output given the huge cost constraints in moving to underground mining.

Major South American copper miners, for instance, are cutting down on production. With Australia’s BHP forced to move mining operations underground in  Escondida, things are becoming tougher on the supply side.

Water problem 

Chile is the biggest copper-producing nation, supplying 30% of the world’s red metal. Copper grades have declined about 25% in Chile over the last decade, bringing less ore to the market. To add to its woes, Chile has a water problem as well.

A 2019 report by Moody’s Investors Service said that some of the worst droughts in half a century had led to tougher environmental norms that are hiking miners’ costs and risks. Among the countries with mines exposed to decreasing water availability are Peru, Chile, Australia, South Africa and Mongolia.

Copper has assorted uses-- in construction wiring and piping, electrical transmission lines and the like. There is a new window opening for copper now. The global thrust on electric vehicles and alternative forms of energy is huge because the metal is used in photovoltaic cells used for solar power and wind turbines.

The base metal is also a key component of the global 5G telecom build-out. Even though 5G is wireless, its deployment involves a lot more fibre and copper cable to connect equipment.

Given the background, Chief Minister Stalin is in a spot. The Sterlite closure cost precious livelihoods and Ford Motor’s recent decision to close its factories in India (it has one in Tamil Nadu and one in Gujarat), his government has quite a challenge on its hand. Although his party was at the forefront of the anti-Sterlite agitation, Stalin cannot wish away the ground reality.
KT Jagannathan is a senior journalist based in Chennai
first published: Oct 21, 2021 01:28 pm