NEW DELHI: The Sterlite copper plant has been closed since May 2018, the raging crisis between the company, owned by Vedanta—one of the world’s largest miners—and the Tamil Nadu government is now in the Supreme Court. It is almost like a now or never situation for the company, which has filed a special leave petition (SLP) to undertake maintenance activities at its plant in Thoothukudi, a port town in the Coromandel Coast of Bay of Bengal. All eyes are now on the lawyers of Vedanta, and those from the Tamil Nadu government when they start arguing the pros and cons of the case in the Apex Court. Whatever be the judgement, it will have deep ramifications on how New Delhi should balance environmental concerns against necessities for investments, industries and growth.
But one point is clear: The crisis should be resolved.
Much before the Covid-19 pandemic hit India, tens of thousands of families in a sleepy but thriving Thoothukudi had seen their lives, livelihoods and dreams crushed by forces they could barely comprehend. In May 2018, the Tamil Nadu government shut down the copper smelting plant of Sterlite Industries. That plant, one of the largest in Asia, accounted for 40% of India’s total copper output. For thousands of workers, vendors, suppliers, transporters and ancillaries dependent on that plant, life has been a bleak struggle ever since.
Their fading hopes were dealt a body blow on 18 August 2020 when the Madras High Court dismissed a petition filed by Sterlite seeking a reopening of the plant. There have been allegations that Sterlite has violated environmental laws and that the copper plant was causing life threatening pollution in Thoothukudi, where the smelter is located. Employees at the plant who have stayed in colonies right next to it for more than two decades have never reported any ill effects of pollution. Neither have the tens of thousands of people who live and operate businesses in the vicinity of the plant. But their voices went unheard. Those who wanted the plant to down shutters offered a 2003 study that showed a few living close to the plant had breathing issues.
A few? No one knows what happened after that and whether or not their medical condition worsened.
Economists tracking the case say the current Madras High Court judgement is a big boost for those siding with activism, perhaps the fastest growing activity in India after social media. Ironically, the National Green Tribunal had come to the rescue of Sterlite after the Tamil Nadu government had shut down the plant in May 2018. As the apex national body related to environmental issues, the NGT had ruled that the Sterlite plant was not in serious violation of environmental norms and asked the Tamil Nadu government to reopen the copper plant. However, the government appealed the NGT verdict in the Supreme Court, which in turn ruled that the NGT had no jurisdiction over the case. Sterling then approached the Madras High Court for relief, which was denied recently.
All this means little for the thousands who have lost livelihoods. Six months after the plant was shut down, reporters flooded Thoothukudi and interviewed a series of people who were dependent on the plant for a livelihood. One was Mohan whose family became penniless just six months after the closure of the plant at Thoothukudi. He was not even in a position to pay the monthly rent of Rs 3,000 for the house where he stayed with his family. He did not know how he would be able to organise money to pay the school fee of his son. Mohan was one of the 2,500 contract workers who lost their jobs immediately after the plant was shut down. It was not just workers who lost livelihoods. There was an entire ecosystem of vendors, suppliers, small scale units and transporters who were dependent on the Sterlite plant for a dignified living. All gone since May 2018. While direct and indirect employees are estimated at 20,600, the closure also hit 400 downstream industries that employed close to 100,000 people. When operational, the plant was also the largest supplier of sulphuric acid in southern India, the only competitor to import of phosphoric acid used for fertilizer manufacturing and key supplier of slag and gypsum to 20 cement companies in the region. The plant’s sudden closure also impacted employment of port workers and in the logistics sector, where another 12,000 people lost their livelihood. The shutdown means a direct loss of Rs 5 crore per day to Vedanta. The government too is losing sizable revenue that comes its way in form of taxes and duties. Annually, Sterlite Copper has been paying up to Rs 2,559 crore to the exchequer by way of taxes and other statutory contributions.
Soon after the plant was ordered to be shut down, analysts argued how damaging the move would be. Kanchan Gupta, who worked at the PMO during the first NDA regime under Atal Bihari Vajpayee wrote: “The Sterlite copper plant at Tuticorin has been shut after (a section of the Church) led protests. It produced 40 percent of India’s copper output of 10 lakh tonnes; 1.6 lakh tonne was exported. Closure will impact 800 small and medium units. Thousands of jobs gone.” The fears have indeed come true.
So what did Sterlite mean to India?
Thanks largely to Sterlite, India was not obliged to import copper since the turn of this century. The rising demand for copper as the Indian economy grew rapidly was met by domestic output. In fact, there was a sufficient surplus to be able to export copper out of India. But all that is nostalgic history as the domestic copper industry suffered a crippling blow due to the shutdown. In the last 27 months, India’s copper industry has suffered a huge body blow, leading to loss of production and precious outflow of foreign exchange. From a peak output of 848,000 tonne in FY18, production fell sharply to 409,000 tonne in FY20. Similarly, exports fell from 421,000 tonne or $2.7 billion in FY18 to merely 31,000 tonne or $186 million in FY20. Imports, on the other hand, have risen sharply from 215,000 tonne or $1.4 billion in FY18 to 341,000 tonne or over $2 billion (Rs 15,000 crore) in FY20. The import quantum and outflow of foreign exchange will only go up in the current financial year.
The plant was shut down because of allegations that it was causing unacceptable environmental damage. But ironically, independent studies conducted subsequently revealed that the allegations were exaggerated. The Times of India on 5 December 2019 said the following: “Air quality in Tuticorin has remained unchanged, even a year after Sterlite smelter closure by the Tamil Nadu government 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.”
The continued closure of the plant appears even more absurd in the times of Covid-19 pandemic. The economy is in doldrums and Prime Minister Narendra Modi had personally made a clarion call for an Atmanirbhar Bharat. In July this year, Sajjan Jindal, chairman of Jindal Steel said in a statement: “We cannot keep making by buying cheaper Chinese raw materials.” His son Parth Jindal said his business once imported material worth $400 million a year from China and he vowed to reduce it to zero within two years. RPG chairman Harsh Goenka, tweeted: “In one of our businesses, 65 percent of the turnover came from Chinese imports. In the last two months, we have already brought it down to 35 percent. Onward March to take it as close to zero as possible. Let’s all give Make in India a special thrust and make our country a China-Mukt Bharat.”
So what about copper? Shouldn’t India produce more at home and—actually—export this non-ferrous across the world? Someone needs to seriously think about the plant and its future.