Sterlite Industries copper plant shut for at least a week after leak

NEW DELHI/MUMBAI Tue Apr 2, 2013 10:39pm IST

1 of 3. A private security guard stands in front of the main gate of Sterlite Industries Ltd's copper plant in Tuticorin in Tamil Nadu March 24, 2013.

Credit: Reuters/Stringer

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NEW DELHI/MUMBAI (Reuters) - Sterlite Industries Ltd'sSTRL.NS copper plant in India, the country's largest, will stay closed at least until a hearing next week about a gas leak reported at the site, tightening supplies of the red metal in Asia's third largest economy.

An extended shutdown of the smelter, which produces more than 300,000 tonnes per year and supplies half of India's domestic copper needs, could spur imports and drive up prices, traders and analysts have said.

The smelter will not open before a hearing at the Chennai bench of National Green Tribunal, set up for the quick disposal of environmental cases in India, said three officials with the pollution control board of Tamil Nadu, where the plant is located.

"A hearing has been posted for April 9 at the Chennai branch of the National Green Tribunal," said one of the officials, who declined to be named because of the sensitivity of the issue.

He said the plant could not open before the hearing.

The Tamil Nadu Pollution Control Board (TNPCB) last week ordered Sterlite to temporarily close the Tuticorin plant following complaints by locals of breathing problems.

The company declined to comment on the hearing date.

The smelter, located in the coastal town of Tuticorin near the southern tip of India, has long been the target of protesters and local politicians who say it is a risk to the local fishing industry.

COURT FINE

In a separate case, India's top court on Tuesday fined Sterlite, a unit of London-listed Vedanta Resources PLC (VED.L), 1 billion rupees for breaking environmental laws at the same copper smelter.

Despite imposing the fine, the Supreme Court overruled an earlier order from the Madras High Court demanding the firm close the plant over longstanding environmental concerns. That disputed order was handed down before the gas leak forced the smelter's immediate closure.

Shares in Sterlite jumped after the verdict and closed more than 4 percent higher.

The court said the judgment will not stand in the way of the TNPCB issuing directions to the company, including one for closure of the plant, for the protection of environment in accordance with law.

The first of many petitions against the plant was filed in 1996. The company says it is in compliance with environmental regulations.

The top court said ground water samples showed high mineral contents in terms of dissolved solids as compared to the drinking water standards, indicating pollution.

"We have to see that no person or society would be adversely affected by environmental hazards," said judge A.K. Patnaik, who delivered the court's judgment.

The court said that levels of chromium, copper and lead were higher than stipulated in some of the groundwater samples collected from the area, while emission of suplhur dioxide was well within limits stipulated by TNPCB.

"Sterlite Industries would continue to work in close association with the State Government of Tamil Nadu and other regulatory bodies, towards maintaining highest standards of Health, Safety and Environment," it said in a statement.

India consumes around 600,000 tonnes of copper annually, about 3 percent of the world's total, far behind China which used around 9 million tonnes last year.

(Additional reporting by Suchitra Mohanty in NEW DELHI and Anupama Chandrasekaran in CHENNAI; editing by Frank Jack Daniel and James Jukwey)

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