Vedanta copper smelter closure to effect India's production upto 50 pc
The smelter produced around 4,00,000 mt of copper per year.
Mumbai: Tamil Nadu government on Monday ordered Anil Agarwal led Vedanta Ltd to shut permanently a copper smelter following a protest in which 13 people lost their lives and several injured, the state government's decision to close the plant permanently will effect the copper production in India.
Tamil Nadu CM Edappadi K Palaniswami, ordered the southern state pollution control board to seal the smelter located in Tuticorin. The closure will bring about 50 per cent decline in India's copper production. Vedanta claimed that the closure is an unfortunate development and it will study the order before taking further action on it.
“If the closure is permanent, then what we expected to happen two years down the line will happen with immediate effect,” said Jayanta Roy, senior vice president at ICRA Ltd.
The smelter produced around 4,00,000 mt of copper per year, Vedanta had suspended the output from it's Tuticorin plant since March due to maintenance, and the closure of the plant came as a result of the deadly protest.
Vedanta shares fell as much as 6.2 per cent to Rs 237.90 in Mumbai, the lowest since June 28, 2017, making it the worst performer among the top 10 metal companies in India.
The company’s total copper output was 8,42,961 tonnes in 2017-18, according to government data. Sterlite Copper is a unit of Vedanta Ltd which operates a 4,00,000-tonne per annum capacity plant in Tuticorin.
According to an estimate from S&P Global Ratings the closure of plant would bring about a loss of USD 200 million to USD 250 million from Vedanta’s annual earnings.
“Now, with no new capacities coming in and if almost 40 per cent goes out on top of that, we will be in a deficit,” added Jayanta Roy.