Sterlite smelter to stay shut until at least May 8

CHENNAI/NEW DELHI Mon Apr 29, 2013 5:21pm IST

1 of 2. A general view shows Sterlite Industries Ltd's copper plant in Tuticorin, in Tamil Nadu April 5, 2013.

Credit: Reuters/Stringer/Files

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CHENNAI/NEW DELHI (Reuters) - A month-long shutdown at India's largest copper smelter was extended for at least another week after a state tribunal unexpectedly said it would not rule on complaints about emissions.

The case was transferred to an environmental fast track court in Delhi from a regional branch in Tamil Nadu, where the smelter is located. Two court officials in Delhi told Reuters a hearing will take place on May 8.

The March 30 closure of the Sterlite Industries STRL.NS plant, which supplies half of India's copper demand, pushed about 3,000 tonnes per day of copper concentrates onto the market, sending processing fees to a five-month high in Asia.

Justice M. Chockalingam of the National Green Tribunal, who was slated to preside over the case on Monday, said "circumstances and intervention" prevented it from being heard in the state. He did not elaborate.

Output at the Sterlite facility, which produces about 30,000 tonnes a month of refined copper, nearly half of which is exported to China, was halted after local residents complained of emissions that resulted in breathing problems.

"The process will have to start afresh. This is unfortunate for the judicial system," said Abdul Saleem, lawyer for the Tamil Nadu Pollution Control Board. "We don't know the reasons for the transfer."

The plant has long been a target for environmental protests. The Supreme Court earlier this month fined Sterlite about $18 million for breaking environmental laws at the site in another case.

Traders had expected the smelter to get clearance to reopen, albeit with conditions.

"No-one is panicking because of the supply glut around but if it doesn't get resolved soon that could change," said a Singapore-based source at a trading house. "Everyone is of the opinion that Sterlite is going to get resolved soon, but it doesn't seem to be turning out that way."

An expert panel inspected the smelter last week and was to report back to the court on Monday. Chockalingam said the report would be sent, still sealed, to the New Delhi court.

Sterlite, which also produces zinc, lead and silver, said it was disappointed.

"We expected some result today," said P. Ramnath, chief executive of Sterlite's copper business.

The company has said the high emission readings occurred when workers recalibrated sensors during maintenance.

PREMIUMS SEEN EDGING HIGHER

Sterlite, a unit of London-listed Vedanta Resources Plc (VED.L), had declared force majeure on copper deliveries and concentrate purchases after the closure of the plant.

Copper premiums in Singapore, which hit a near one-year high early this month partly fuelled by Sterlite's halt, were unchanged on Monday.

"Premiums might go up, just a little, but I still think it will reopen sooner rather than later," said a second source at a trading house in Singapore.

The setback for Sterlite comes just over a week after the Supreme Court said it would maintain its ban on bauxite mining in Odisha, putting the firm's plans there on hold.

(Additional reporting by Melanie Burton in Singapore; Editing by Jo Winterbottom and Amran Abocar)

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