Photo: Reuters; Graphic: Paras Jain/Mint
Photo: Reuters; Graphic: Paras Jain/Mint

The Sterlite saga: What next for the key stakeholders

Over its 20-year existence in the port city, the Sterlite copper plant has run afoul of environmental regulations more than

Sterlite Industries, a division of billionaire Anil Agarwal’s Vedanta Ltd, runs a copper smelter at Thoothukudi in Tamil Nadu. Over its 20-year existence in the port city, the plant has run afoul of environmental regulations more than once.

What led to the current situation?

Over the past 100 days, residents of Thoothukudi had peacefully protested against plans by Sterlite Copper to double its production capacity at the copper smelter. The smelter’s current capacity is 400,000 tonnes a year and the work to expand this to 800,000 tonnes a year had begun late last year.

Residents of the town allege that the smelter’s operations have polluted the town’s air and water and increased the incidence of cancer and respiratory diseases in neighbouring villages.

Why did the Tamil Nadu government shut down the plant?

The protest reportedly turned violent on 22 May and the police opened fire on protesters, killing 13 people and injuring over 120. Chief minister E.K. Palaniswami has said that the firing was due to “unavoidable" circumstances. The crackdown fanned more anger, prompting the Tamil Nadu Pollution Control Board to cut power supply to the plant. On Monday, the government ordered the permanent closure of the factory and cancelled the additional 350 acres of land allotted for its expansion.

Vedanta’s Anil Agarwal. Photo: Pradeep Gaur/Mint
Vedanta’s Anil Agarwal. Photo: Pradeep Gaur/Mint

What will Vedanta do?

Vedanta Ltd is expected to legally challenge the closure of its plant. Even activists believe that the wording of the closure order will not hold in court. A prolonged legal battle is likely.

What is the problem with the plant?

Activists say that Sterlite has flouted a host of environmental checks, including in the design of pollution mitigation infrastructure. A far shorter-than-required chimney stack prevents dispersion of air pollutants, leading to health problems for people who live in the vicinity. The company, however, says these allegations are baseless and that it has complied with all legal requirements in building and operating the smelter.

What does the shutdown mean for India and Vedanta?

Of the Sterlite smelter’s total output, 234,000 tonnes are supplied to the Indian market, accounting for 36% of the country’s copper consumption. The plant also employs 3,500 people directly and many thousands more indirectly. Vedanta has warned that a shutdown will lead to job losses, more dependence on imported copper and a dent on Tamil Nadu’s industry-friendly reputation.