File photo of Vedanta’s Sterlite Copper unit in Thoothukudi in Tamil Nadu. (Photo: PTI)

National Green Tribunal Orders Reopening Of Vedanta’s Sterlite Copper Plant In Tuticorin

Vedanta Ltd. can restart its copper smelter in Tuticorin, which accounts for nearly half of India’s output, the National Green Tribunal said.

The tribunal set aside the Tamil Nadu state government’s order to shut Sterlite Copper's 2,50,000-tonne plant, saying it was “unsustainable”. It also directed the Vedanta subsidiary to spend Rs 100 crore on the welfare of the inhabitants in the area, according to the verdict put up on its website on Saturday.

The bench, headed by chairperson Justice AK Goel, ordered the Tamil Nadu Pollution Control Board to provide the required permission for opening the smelter within three weeks and directed power supply to be restored.

The tribunal studied the specific reasons given by the Tamil Nadu government and said those weren’t sufficient to close the plant.

Here are the state government’s reasons and the tribunal’s responses:

  1. Not furnishing the ground water report: The ground water analysis report is already with Tamil Nadu Pollution Control Board, the tribunal said, adding even if there was a technical breach, it was trivial in nature.
  2. Not removing copper slag stored along the river Uppar and not constructing physical barrier between the river and the slag: The NGT neither found the copper slag to be hazardous nor obstructing the river flow. The state government did not even give an opportunity to construct a physical barrier, it said.
  3. Non-authorisation to generate and dispose hazardous waste: NGT said Vedanta has been taking all necessary steps in the matter as per rules. This ground does not justify closure.
  4. No analysis of air quality for parameters of heavy metal: The order said there is no evidence to show any violation of air quality norms by the plant and that the analysis had taken place.
  5. No gypsum board constructed as per Central Pollution Control Board guidelines: The NGT said the time given for construction of a pond was still available and there was construction of a pond earlier as per the old guidelines.

“We are happy that all those affected by the closure will get back their source of livelihood and the town of Thoothukudi will revert to normalcy,” said P Ramnath, chief executive officer of Sterlite Copper. “We will study the order in detail and shall take all steps required to restart the operations as per the guidelines given by the court.”

Tamil Nadu Chief Minister Edappadi K Palaniswami, however, said the state will challenge the NGT’s order in the Supreme Court.

Billionaire Anil Agarwal-led mining company was ordered to shut the copper smelter permanently following deadly protests over pollution concerns. About 13 people were killed in a police firing during protests. Vedanta had suspended production from the plant in March for maintenance, and the closure was extended as the state pollution control board denied renewal of licence citing water and air pollution concerns. The company expected to double the capacity of the plant to 800 kilotonnes by 2019-20 at a capital expenditure of $717 million, according to its filings.

The tribunal gave some precautionary guidelines that the company will have to follow, including creating a website for lodging and redressal of complaints by stakeholders in the area, updating the ground water quality report on the website, timeline for complying with the recommendations of the NGT-mandated committee, among others.

The NGT had appointed a committee headed by retired Justice Tarun Agarwal to look into the issue and submit its report. The panel, too, had found the closure to be incorrect.

Also read: Vedanta Blames NGOs for Closure of its Indian Copper Smelter

Verdict Impact On Vedanta’s Financials

A favorable order from the NGT will be positive for Vedanta’s stock price, said JPMorgan, in a report released ahead of the tribunal’s verdict, but it’s likely to have limited impact on the company’s financials.

The copper division contributes only 5 percent to Vedanta’s operating income, according to BloombergQuint’s calculations based on the company’s financials. But the Anil Agarwal-led company has been one of the worst performers in the benchmark NSE Nifty 50 Index so far this year. The stock has declined nearly 39 percent, mainly due to the shutdown of the Tuticorin smelter and iron ore mining in Goa.

Also, analysts await more clarity on when the plant might be reopened.

“The timeline remains a question because final decision would end up with the Supreme Court as the losing party is likely to challenge it further,” Ritesh Shah, analyst at Investec Capital Services, said. “But it’s a step in the right direction for Vedanta.”

Agreed JPMorgan. A resolution could still be months away, it said, adding the smelter might not restart in financial years ending March 2019 and 2020 as well. “We expect the smelter to restart only from the second quarter of FY21.”