The closure of UK-based Vedanta Resources’ Sterlite Copper plant at Thoothukudi in Tamil Nadu following protests last year is beginning to affect the copper industry as well as downstream sectors that depend on it.
Following the closure of Thoothukudi Sterlite Plant on 28 May last year, among the first fall out is that India has turned a net importer of copper cathodes.
In 2018-19 fiscal, exports of copper cathodes fell by 87.4 per cent, while imports rose 131.2 per cent. In comparison, exports were up 12.3 per cent in 2017-18 and imports increased by 35.6 per cent.
In quantity terms, exports dropped to mere 48 kilo tonnes (kt) in 2018-19 against 398 kt in 2017-18, while imports increased to 84 kt from 36 kt during the same period.
Japan was the biggest beneficiary of Indian imports last fiscal as its refined copper made up 71 per cent of the total shipments into the country. Other sources such as Singapore, Congo, Chile, Tanzania, the United Arab Emirates and South Africa made up the rest.
On the export front, 75 per cent of refined copper headed to China, while another 13 per cent went to Taiwan. Malaysia, Bangladesh and South Korea were the other destinations.
A feature of this export-import scenario is the imports from Japan and exports to China increased during the fiscal.
The net importer status continues this fiscal too. During the April-July period of current fiscal, copper cathode imports into the country have increased by 82.6 per cent, while exports dropped 72.7 per cent, a report by CARE Ratings said.
This period has seen imports from Japan rise to 86 per cent, while exports to China increased to 83 per cent.
One of the major reasons for the country becoming a net importer is that primary refined copper production declined by 53 per cent in the last fiscal. This fiscal, the output is up by a marginal 1.7 per cent.
Primary refined copper consumption, too, dropped last fiscal by 15.3 per cent.
A positive outcome, though, from the Sterlite plant closure is that production of secondary refined copper has increased this year, helping to meet a rise in consumption.
Secondary refined copper is produced from copper scrap and its properties are as good as primary refined copper.
Copper consumption in the first four months of the fiscal has shot up by 25 per cent on demand from the electrical sector for power, cables and transformers.
India is witnessing a 4.2 per cent compounded annual growth rate in refined copper mainly for infrastructure, renewable power, automobile, telecommunications, and consumer durables sectors. Electrical and telecommunications sectors make up 56 per cent of the total copper consumption in the country.
India has turned a net importer as the shut Thoothukudi Sterlite plant contributed 40 per cent of the country’s total refined copper production.
Of the country’s annual production capacity of 1,000 kilo tonnes (kt), Sterlite produced 400 kt, while Hindalco’s Dahej plant output is 500 kt with the rest being produced by Hindustan Copper at its various plants.
Until 2017-18, India was a net exporter but the closure of the Sterlite plant, on orders of the Tamil Nadu government, has changed the scenario.
The Thoothukudi plant was ordered shut after protests seeking its closure turned violent resulting in 13 people being killed in police firing. The protesters demanded closure claiming the plant was polluting the town.
Although Sterlite has not covered itself with much glory, many have suggested that the protests were fuelled by sinister forces in Tamil Nadu. In particular, fingers are being pointed at Mohan Lazarus, owner of a television channel, for encouraging mass participation of church devotees in the protests.
The closure of the Sterlite plant has also led to the decline in imports of copper ores and concentrates by 44.6 per cent as demand for them slackened.
Since India doesn’t have ample ore to meet the industry’s demand, the refiners import ores and concentrates.
Copper is the third-most used metal in the country after steel and aluminium in terms of quantity consumed but India is handicapped by limited ore reserves.
India has only 2 per cent of the world’s copper reserves, while its production makes up a meagre 0.2 per cent of total global output.
Vedanta Resources has contended the closure of the plant. The National Green Tribunal, in its ruling, didn’t find Sterlite violating any environmental law and asked the Tamil Nadu Pollution Control Board to renew its consent for the plant’s operation.
It also set aside the state government order to close the plant.
However, the Supreme Court overruled the tribunal’s verdict setting aside the state government’s closure order.
It, however, gave Vedanta the liberty to approach the Madras High Court against the closure.
The case is now pending in the Madras High Court, where Sterlite’s plea is being heard.
The Central Bureau of Investigation is probing the 22 May 2018 incidents that resulted in police firing.
With India focussing on infrastructure and electric vehicles (EVs), copper consumption is set to increase rapidly. The implementation of the Prime Minister’s Awas Yojana besides providing urban housing under the scheme will see demand for electrical wiring in over 28.5 million houses.
In the power sector itself, India has set an ambitious target of installing 175 GW of renewable energy capacity by 2022.
More importantly, India is one of the countries that is trying to drive up the use of EVs. Copper usage in EVs is four times more than ordinary petrol or diesel vehicles as the metal is needed for wirings, motors, busbars, and charging infrastructure.
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