Many situations, related end result: Tuticorin plant might not restart, say consultants

Vedanta’s plan to unload its closed copper smelter plant in Tuticorin, Tamil Nadu, may play out in a number of other ways, steel business executives and analysts mentioned, however in the direction of the identical end result — the unit not getting restarted.

Last month, the Anil Agarwal-promoted firm invited expressions of curiosity for the copper smelter with a deadline of Monday, July 4. The provide consists of the sale of the copper smelter advanced, sulphuric and phosphoric acid vegetation, copper refinery, a captive energy plant and a residential colony, amongst different related infrastructure.

When functioning, the plant addressed virtually 40 per cent of India’s copper calls for however was shut down by the Tamil Nadu Pollution Control Board in May 2018 after violent protests emerged exterior the plant due to environmental considerations, main to fifteen individuals being killed by police firing. In March 2020, the Madras High Court dismissed Vedanta’s pleas difficult closure of the plant, and the corporate then appealed in opposition to the order in Supreme Court, which began listening to the case in March this yr. The firm’s plans to promote the plant has come even because the apex courtroom is but to offer its verdict.

“We do believe that there are a lot of sensitivities involved, and any bidder looking to acquire the Tuticorin plant is going to very critically evaluate restarting production. The Supreme Court decision is also pending, and there is no political support from the state government,” Hetal Gandhi, director, CRISIL Research advised The Indian Express.

Gandhi additionally identified that due to the rising demand for copper, new gamers are displaying curiosity in coming into the sector. Ahmedabad-based Adani Group has began work to construct a 1 million tonne each year copper plant in Gujarat, which the corporate says will probably be one of many largest copper refinery complexes on the planet. It is predicted to begin manufacturing by 2024. “If you see, a new area that Adani is entering, like cement, has been through acquisition at a very high premium. So for the copper unit also, if they saw a remote chance at restarting production (at the Tuticorin plant), they would have tried (to acquire) it,” Gandhi added.

A senior govt at a state-owned mining firm mentioned that Vedanta’s transfer to promote the copper plant may very well be a technique to pressurise the federal government. “State governments are very keen on bringing in new investments, and the sale of such a major plant could send the wrong message for the political leadership. But also keep in mind that the Tuticorin issue is a very politically sensitive issue. Neither of the major political parties in Tamil Nadu have supported reopening of the plant. Even with a new owner, the obstacles to restart the unit still remain,” the chief mentioned. An e-mail question despatched to Vedanta in India didn’t elicit a response.

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Analysts mentioned that the plant’s operations assume significance given India’s import dependence for its copper wants. “Since 2018-19, India is importing copper in different formats. In 2020-21, almost 52 per cent was being met through imports, and in 2021-22, this number jumped to almost 61%. So while the demand for copper is rising, we are seeing share of imports is actually going up. This includes both primary and secondary copper,” Gandhi mentioned.

Saurabh Bhatnagar, associate and metals & mining consulting chief, EY India, mentioned: “Copper is a major component in many industries, with the electrical and telecommunications industries being the largest consumers, followed by transport, consumer durables, building & construction and engineering goods. Therefore, its usage remains a good indicator of economic health. With a consistent GDP growth of the country, and with a dip in domestic production, imports of refined copper increased to 92,290 tonnes in 2018-19 from 44,245 tonnes in 2017-18 while exports declined to 47,917 tonnes from 378,000 tonnes during this period”.

“India will continue to import more copper in various forms in the country to meet its growing demand,” he added.