Tuticorin Smelter Shutdown severely Impacts Vedanta’s Profits
One of India’s largest Copper smelter at Tuticorn operated by Sterlite Copper, a business unit of Vedanta ltd. faces loss of $ 200 million in profit after being closed for more than a year. As stated by Vedanta Group Chairman, Mr. Anil Agarwal in an interview with PTI on 16th June 2019 along with the huge financial “as many as 20,000 direct and indirect jobs have been lost due the shifting of the smelter and about 98,400 more were affected in the consumer or downstream industries.”
The plant was contributing approx. 36% of India’s refined copper demand as per the data of FY 2018.
The plant has a design capacity of 4,00,000 tonnes and was serving cables, transformers, motors and other important industries. Unfortunately on 28th May 2018 by the orders of Tamil Nadu Government it was permanently shutdown over environmental concerns and strong protests by locals in which 13 lives were also lost.
Impact of Tuticorin’s Shutdown on Economy
As mentioned in Vedanta Ltd.’s Annual Report FY 2018-19 India has faced a crunch in refined copper due to Tuticorin shutdown. It also mentioned that Chinese smelter output has increased by 4.2 % in 2018 despite the fact that small smelters have shut down in China.
In news article by News 18 dtd. 16th June 2019, Anil Aggarwal commented that Shutdown is forcing import of Copper and spending of precious foreign exchange. Tuticorn plant was the import substitute of the nation but at present reverse is being practiced. He further stated that the closure is impacting the state of Tamil Nadu which has started facing reduction in foreign investment which is causing worry for future employment.
Future Expected Demand Growth in Copper
Vedanta’s Annual Report for FY 2018-19 also mentioned that in 2018 Copper consumption had increased 2.9 % in India and 4.9 % in China and it is expected that in the coming year Copper consumption shall increase by 11.8 % and 1.6 % respectively, driven by population growth, urbanization and increase in electric vehicles.
According to the data of International Copper Study Group (ICSG) it is estimated that for 2019 Global demand vs usage – deficit shall be 190 Kilo Tonnes. For 2020 this figure is expected to be 250 Kilo Tonnes as per ICSG.