Vedanta, India’s largest mining company, has moved the Supreme Court with a special leave petition (SLP) to undertake maintenance activities at its Sterlite Copper plant in Tamil Nadu, closed since May 2018.
The apex court will soon start hearings. This could be India’s ideal case of balancing environmental concerns with necessities for investments, industries and growth. The faster it is resolved, the better it is for the nation and its economy.
The closed plant is hanging over Vedanta like the proverbial sword of Damocles. Its fate is unknown, and the stalemate has existed for over two years.
The impetus for closure of the plant in Thoothukudi — where workers are still displaying plenty of forbearance — isn’t entirely economic. There’s a lot of politics involved.
The demand to shutter one of Asia’s largest plants is from the Tamil Nadu government that blames Sterlite for polluting groundwater, releasing toxic fumes in air, and spilling toxic waste into the sea. Sterlite has contested the charges.
With the plant closed, many downstream units have also fallen on bad days. Thoothukudi is now a ghost town. There are other tensions as well.
In the end, the issue boils down to India’s copper business. When it was operating, the plant produced more than 40 percent of the total domestic output of copper. Now, India spends $2 billion annually on copper imports, mainly from China. Vedanta’s grudge is that no one is talking about domestic copper production in India, and Indian industry seems resigned to rising copper imports.
Copper production has somewhat become an uncharted territory, almost like the iron ore mines in Goa, Odisha and Chhattisgarh where protests prevail over the works, impacting production. Then, it invariably turns into an election issue, like it is happening in Tamil Nadu. If the Thoothukudi plant remains shut, then thousands of people employed — directly and indirectly — will have to find new means for earning a living.
The Sterlite Copper is a perfect one step forward, two step backward case. The Madras High Court, through its August 18 verdict, upheld the decision of the Tamil Nadu government, blaming Sterlite for violation of environmental rules. The court judgment came after the National Green Tribunal had in 2018 asked the Tamil Nadu government to allow reopening of the copper plant.
With the Sterlite SLP in the apex court, it will be some time before the matter is settled. Add to this is the economic impact of a synchronised shutdown of a plant.
The sociological impact of such agitation-led shutdown is unlike any seen since the 1970s collapse of Bengal’s industry, and the 1982 cotton mill workers agitation in Bombay.
The big industrialisation debate in India is always without logic. One side says mining companies rarely value environmental laws; the mining companies say protestors work with vested interests, and do not understand the intricacies of environmental laws. For example, can there be illegal iron ore mining if all mines are situated cheek by jowl in a state? Or can there be environmental violations if the NGT issues a safety clearance?
The police firing on protestors in Thoothukudi caused 13 deaths in May 2018, and turned out to be the biggest trigger for the shutdown. The plant became a political tinderbox and the Tamil Nadu government was forced to down shutters.
Lost in the middle is both business and growth. Big plants are ventilators vital for treating the economy.
The closed plant in Thoothukudi has already shown a glimpse of the deterioration that’s coming. India is likely to end the current financial year 2020-21 with copper imports of 400 million tonne against 341 million tonne in the year ago. The figure could reach 500 million tonne by 2022. From being a net exporter of copper, India became a net importer of the metal for the first time in 18 years since 2019 after Sterlite Copper downed shutters in May 2018.
This is a self-inflicted wound to the economy, a dampener for investor sentiment when the economy is in doldrums because of COVID-19 pandemic. A sense of unease has gripped the corporate world.
On August 25, RPG Enterprises’ chairman Harsh Goenka tweeted that “In one of our businesses, 65 percent of the turnover came from Chinese imports. In the last two months, we have already brought it down to 35 percent. Onward march to take it as close to zero as possible. Let’s all give #MakeInIndia a special thrust and make our country a ‘China mukt Bharat’.” In other words, Aatmanirbhar Bharat has found resonance in most of the sectors except copper. The domestic copper industry lies like a prostrate, disembowel Gulliver, totally helpless.
The Thoothukudi plant has become a disturbing symbol for Indian industry.
The central government is trying hard to create a more enabling environment for investors, confirmed by a massive improvement in India’s rankings in the World Bank Ease of Doing business Index.
Unfortunately, the Centre’s enthusiasm is not shared by many state governments. Many states still have a bewildering array of rules and regulations that are a challenge to investors. In a federal set up like India, state governments have a lot of power.
However, there are times when that very power works against the interests of the nation.
Shantanu Guha Ray is a Delhi-based journalist. Views are personal.
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