Sterlite Copper closure cripples downstream industries

Sterlite Copper closure cripples downstream industries

The plant’s permanent shutdown has also crippled the fertiliser and detergent industry with manufacturers being forced to buy raw materials from far-away Rajasthan, leading to financial losses.
The Vedanta-owned Thoothukudi plant alone was supplying 38% of the country’s copper needs since the smelter had the capacity to produce nearly 4 lakh tonnes every year.

Many small-scale industries that are dependent on copper produced within the country have suffered losses since there was a huge gap between demand and supply of the commodity.

According to an industry estimate, as many as 400 small scale units dependent on Sterlite Copper have been affected.
The plant was also supplying Sulphuric Acid, which is the main raw material used to produce fertiliser and detergent products – major fertiliser manufacturers like SPIC, who was one of the key customers of Sterlite Copper, have now been forced to look for raw materials from other states.

Since May, the country has imported 202 kilotons (KT) of copper cathode, rods and wires from April to November 2018 in just seven months, while the import of the aforesaid commodities in the 2017-2018 fiscal was 215 kilotons.
“Import of copper cathode, rods and wires in India for the current fiscal (April 2018 to March 2019) is expected to be 303 KT which is an increase of 41% in import of refined copper when compared to the previous year,” an industry leader said, adding that the price has increased by $100 (approximately Rs 7,100) per metric ton in the domestic market since the closure of the plant.

SC green signal

With the Supreme Court signalling the green light, Sterlite Copper hopes to restart operations of the Thoothukudi plant in two to three months from the day it is given access to the massive plant.

“In order to propel the nation’s growth, our country should be self-sustainable on copper. Shortage of domestic copper will not only be a loss in forex reserves but also will be depicted as a vulnerability in the nation’s capability” P Ramnath, CEO, Sterlite Copper, told DH.
Since many industries depend on copper, the shut down of the plant had crippled those sectors leading to financial and job losses. Copper Consumers Association of South India treasurer Hemant K Mehta said the Sterlite Copper plant was shut when the infrastructure sector was booming in the country.

“Cable manufacturers have been greatly hit due to the closure of Sterlite Copper plant and it has created a crisis of sorts in the small and medium enterprises. It made a huge impact in the beginning and though things have streamlined due to efforts by Sterlite, the crisis is yet to blow over and it will not unless the plant in Thoothukudi is up and running,” he said.

Sterlite Copper began supplying copper cathodes from its Silvassa plant, but they could not match the production capabilities of the Thoothukudi factory. “If the Thoothukudi plant is reopened, India’s dependence on import of copper would come down immediately,” Mehta said.

Though the plant was formally closed down in May-end by the state government citing non-adherence to agreed terms and conditions by Sterlite Copper following deadly police firing that killed 13 people protesting against Sterlite Copper’s expansion plans, the smelter has not been functioning for almost a year now – it was shut for maintenance works in March 2018 and has not rolled up its shutters till today.

Massive job loss

While almost all permanent employees have been absorbed by Sterlite Copper in its group companies, temporary employees and others who were dependent on the copper smelter have been severely hit due to the shutdown. Several hundred contractual employees have lost their jobs – many are yet to find alternate employment, and some have left the Thoothukudi town in search of greener pastures.
After getting the green signal from the Supreme Court to operate its plant – the firm has written to the Tamil Nadu Pollution Control Board (TNPCB) seeking renewal of the Consent to Operate (CTO).

Sterlite Copper is the seventh largest copper smelter in the world, meeting 36% of the total domestic copper market demand in India by producing 4,00,000 tonnes of refined copper per year. Hindalco supplies around 38% of the market demand, while Hindustan Copper accounts for 10% of the demand. Data shows that in 2017-18, Sterlite produced about 48% of the country’s total copper output of 842,961 tonnes.

S Gurumurthy, Vice-President of Chennai-based Chemical Industries Association, said the fertiliser and detergent industry was hit very badly due to non-supply of Sulphuric Acid from Sterlite plant. “Sulphuric Acid is the main raw material for producing fertiliser, detergent cakes, and powder. Many of the small-scale industries faced numerous problems due to the shortage of the acid,” he said.

After Sterlite Copper was shut, many detergent manufacturers were forced to buy Sulphuric Acid from other states like Rajasthan which has resulted in huge financial burden for them due to the high freight charges.

S S Rathi, Chairman, Winding Wires Manufacturers Association of India, told DH that the shutdown has caused an overall shortage of copper and forcing the country to import the commodity in huge quantity.

“The problem was that manufacturers like us did not get the required amount of copper and the shutdown of Sterlite Copper had a huge impact on the industry. Getting required amount of raw materials was a major problem,” he said.

Rathi said while the country was pushing for exports to earn forex revenue, here was a case in reserve. “We have been importing huge amounts of Copper. The sudden stoppage of supply has created a huge scarcity of copper and even the marginal price increase is a huge cost for small units. It is not possible to import copper at short notice,” he added.