InvestorQ : Is it true that the total loss from the Sterlite Copper plant shutdown is over $2 billion?
sara Kunju made post

Is it true that the total loss from the Sterlite Copper plant shutdown is over $2 billion?

Mary Joseph answered.
1 year ago

The Sterlite Copper Thoothukudi plant in Tamil Nadu has been lying shut since May 2018 and shows no chances of reopening soon. Vedanta group has got exasperated and has already decided to look out for an outside buyer for its copper business. Even the Supreme Court had refused to order the opening of the copper plant. The first estimate of the losses have come from CUTS India, which has pegged the potential loss from the shutdown at Rs14,749 crore or approximately $2 billion.

The copper plant was always controversial. Things were all hunky dory for the company as long as Sterlite Copper maintained production capacity at 4 lakh metric tonnes per annum (MTPA). However, the protests gathered steam in India after the company decided to double the capacity to 8 lakh MTPA. That was the start of the problems. Things reached a climax when police firing on the protestors led to the loss of 13 lives and scores of injuries. That led to the Tamil Nadu government ordering the closure of the plant.

The loss estimated by CUTS includes losses to all stakeholders including the central government, the state government, the port authorities, the investors etc. This, however, does not include the loss to the company which has been pegged at Rs4,777 crore. Even a similar reported commissioned by the Niti Aayog estimated that the government of India had lost considerable revenues in the form of missed taxes and duties due to the prolonged closure of the plant for a period of over four years.

But the actual impact could be much bigger. Remember, the copper plant was a big employment and ancillary jobs generator. It would have boosted the importance of the Thoothukudi port in Tamil Nadu as a premier export gateway of South India. But the real regret is bigger. It catered to 40% of the domestic demand for copper. Following the closure of the Thoothukudi unit of Sterlite Copper, India has fallen back from being a net exporter of copper to becoming a net importer of copper. That is perhaps the biggest loss.