Sterlite copper smelter stays shut until at least May 14

NEW DELHI Wed May 8, 2013 2:37pm IST

A view shows the backyard of Sterlite Industries Ltd's copper plant in Tuticorin, in Tamil Nadu April 7, 2013. REUTERS/Stringer/Files

A view shows the backyard of Sterlite Industries Ltd's copper plant in Tuticorin, in Tamil Nadu April 7, 2013.

Credit: Reuters/Stringer/Files

Related Topics

Stocks

   

NEW DELHI (Reuters) - India's biggest copper smelter will stay shut until at least May 14 when a court will review an environmental case again, prolonging a six-week shutdown which is squeezing local supplies and boosting copper concentrate processing fees in Asia.

The Sterlite Industries' STRL.NS plant, which meets half of India's copper demand, was closed on March 30 after residents complained of emissions that led to breathing problems.

Justice Swatanter Kumar of the National Green Tribunal, a special fast-track environmental court, said on Wednesday an expert panel's report had to be given to all parties and set the next hearing for May 14.

The closure of the smelter, which uses imported concentrates, has pushed about 3,000 tonnes per day of concentrates onto the market.

The local environment authority said it might appeal to the Supreme Court if this court decides the plant can re-open.

"Based on the judgment, we may file an appeal with the Supreme Court," said Abdul Saleem, a lawyer for the Tamil Nadu Pollution Control Board.

In a separate case, India's top court last month fined Sterlite about $18 million for breaking environmental laws at the smelter.

The plant produces 30,000 tonnes of refined copper a month - or more than half of India's total production - and nearly half of the output goes to China.

"The closure is already having an impact, physical (copper) supplies are getting tight, and therefore imports into India are positively up," said Sandeep Daga, director at Regsus Consulting Pvt. Ltd. "Even if the plant starts, it will another 2-3 weeks to re-start production."

India's annual copper consumption was about 610,000 tonnes for the year ending March 31, according to government data. Most of its copper exports go to China, the world's biggest consumer of the metal, which used up around 9 million tonnes last year.

"Copper premiums are likely to remain high and could even possibly move up marginally as the plant will remain shut," said a Singapore-based metals trader.

"As of now there is not much of a copper cathode requirement from India but the longer the plant remains closed more and more and people will start looking to cover some of their requirement through imports," the trader added.

Cashing in on regional oversupply after the Sterlite closure, smelters across Asia have been charging the highest fees in five months to process concentrates.

"The impact of Sterlite's closure is that spot shipments have increased in Asia," said a trader at an international firm.

Spot concentrate was trading at treatment and refining charges of about $80 per tonne and 8 cents a pound to China, up by a third from $60 and 6 cents before the closure, added the trader.

The charges are paid by sellers of copper concentrates to smelters for converting the raw material into metal and then deducted from the sale price, based on London Metal Exchange copper prices.

Sterlite, a unit of London-listed resources conglomerate Vedanta Resources Plc (VED.L), controlled by billionaire Anil Agarwal, has been awaiting clearances to double the capacity of the smelter to 800,000 tonnes a year.

The 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. (Additional reporting by Siddesh Mayenkar in MUMBAI, Naveen Thukral in SINGAPORE and Polly Yam in HONG KONG; Editing by Amran Abocar and Ed Davies)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

BACK IN JAIL

REUTERS SHOWCASE

Modi Hurdle

Modi Hurdle

Appointment of Arvind Subramanian as chief economic adviser hits Modi hurdle.  Full Article 

USL Board

USL Board

Diageo bars United Breweries from appointing independent director at United Spirits.  Full Article 

Amazon in India

Amazon in India

Amazon to sell packaged food and beverages in India - Economic Times.  Full Article 

iOS 8 Issue

iOS 8 Issue

iOS 8 causing Bluetooth connectivity issues - Apple news blog  Full Article 

NYT Job Cut

NYT Job Cut

New York Times to cut jobs as new products disappoint  Full Article 

Factory Activity

Factory Activity

Factories expand at slowest pace this year in September  Full Article 

Monetary Policy

Monetary Policy

RBI not biased towards either raising or cutting rates - Rajan  Full Article 

Weak Demand

Weak Demand

Weak demand hits factory activity across Asia, Europe  Full Article 

Pimco Fund

Pimco Fund

Pimco Total Return Fund posts record $23.5 bln net outflow in Sept  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage