Sterlite copper smelter closed until at least April 29

CHENNAI, India Fri Apr 12, 2013 4:23pm IST

A general view shows Sterlite Industries Ltd's copper plant in Tuticorin, in Tamil Nadu April 5, 2013. REUTERS/Stringer

A general view shows Sterlite Industries Ltd's copper plant in Tuticorin, in Tamil Nadu April 5, 2013.

Credit: Reuters/Stringer

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CHENNAI, India (Reuters) - India's largest copper smelter, run by Sterlite Industries LtdSTRL.NS, will not start commercial production until at least April 29, when a court will again consider a request to reopen the plant, shut over complaints of emissions.

The month-long closure of the plant could further drive up premiums for copper in Asia, but traders and analysts said there may be enough stocks to meet demand in India for about a month.

An expert panel will inspect the plant between April 18 and 29, Justice M. Chockalingam of the National Green Tribunal said after a hearing in the fast-track environmental court on Friday.

"The factory will be opened for required hours of operation to assist inspection," he said, adding that the panel would hand in its report on April 29.

Sterlite declared force majeure on copper deliveries after the March 30 closure of the plant, based in Tamil Nadu. It produces about 350,000 tonnes of the metal a year and exports about half of that.

Most of India's copper exports go to China, the world's biggest consumer of the metal, which used up around 9 million tonnes last year -- vastly more than India's annual consumption of around 600,000 tonnes.

Sterlite, a unit of London-listed resources conglomerate Vedanta Resources Plc(VED.L), which is waiting for approvals to double the capacity of the smelter to 800,000 tonnes per year, welcomed the formation of the panel.

"This should have been done before the Tamil Nadu Pollution Control Board took a decision to stop a running plant abruptly without proper basis," said P. Ramnath, chief executive of Sterlite's copper business, referring to the state emissions regulator.

LOCALS' COMPLAINTS

State authorities ordered the closure after nearby residents complained about emissions, saying they had caused burning in the throat and difficulties in breathing.

Sterlite, which has said the plant's emissions were within agreed limits, told Reuters on April 3 it had declared force majeure on copper sales and concentrate purchases. The smelter uses imported copper concentrates as its main raw material.

Force majeure is a contract clause that allows a company to miss shipments in circumstances beyond its control.

Indian end-users had stepped up enquiries for copper cathode as well as scrap following the closure, a Singapore-based trader said last week.

However, there could be enough stocks in Asian warehouses to meet immediate demand, experts said.

"People are not as worried about supply outages as in previous years," said analyst Dan Smith of Standard Chartered in London.

"The price has gone up a bit, but not a lot. I think that tells you there is a comfortable amount of stock out there in various locations and the availability of copper is reasonably good."

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

Last week, the Supreme Court fined Sterlite 1 billion rupees in a different case for breaking environmental laws at the smelter, which has operated since 1996.

In that ruling, the court said levels of chromium, copper and lead were higher than stipulated in some of the groundwater samples collected from the area where the smelter is based, though emission of sulphur dioxide was within limits set by the state emissions regulator.

(Additional reporting by Melanie Burton in Singapore; Writing by Krishna N Das; Editing by Clarence Fernandez)

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