Sterlite Copper Closure: An Engaging Saga To Complete Five Years This Week
The Sterlite imbroglio has taken several twists and turns since its closure and acquired political and legal overtones.
On May 28, the Sterlite Copper plant in Thoothukudi, Tamil Nadu, will complete five years of its closure. It was ordered to be shut down by the then AIADMK government of Edappadi Palaniswami in 2018, following the killing of 13 people in the police firing while protesting against the expansion of the facility. The Sterlite imbroglio has taken several twists and turns since its closure and acquired political and legal overtones.
The merits and demerits of the Sterlite Copper unit have been extensively discussed in court, involving even the highest court in the country. The case is still before the Supreme Court. The whole discussion on the Sterlite imbroglio thus far has been focused on the alleged negative environmental impact of the project in and around the region. The dust and heat generated by the controversy leading to its permanent closure by the Tamil Nadu Government, however, have been brushed under the carpet given the very birth of the Sterlite Copper plant in Thoothukudi and the interesting history that surrounds its existence.
The Sterlite Copper unit has been in the eye of a storm ever since it came into existence. The project was driven out of Maharashtra and Goa for a variety of reasons. Tamil Nadu finally gave refuge to the project. If at all any culpability for letting the so-called polluting unit into Tamil Nadu had to be fixed, it must be fixed on the government of the day that allowed the project to come into the state in the first instance.
Tamil Nadu has been under the dispensation of either of the two Dravidian parties—AIADMK or DMK—all through the development of the Sterlite plant. Notwithstanding intermittent protests through these years, the project went from strength to strength. With close to 4,000 direct and 20,000 indirect jobs, the project helped the region around the port to prosper. It helped India become a copper-exporting nation.
May 28, 2018—the day when the Sterlite plant was ordered closed—changed the fate of the Sterlite workforce. And the day also rewrote the dynamics of copper economics in India. With the closure of the plant, life has undergone a dramatic metamorphosis for the population in the region. In its wake, Covid-19 has only accentuated its misery.
A new government of the MK Stalin-led DMK has taken over in Tamil Nadu. And the last word is still to be pronounced by the Supreme Court in the matter.
The Sterlite imbroglio, in the meantime, continues to generate considerable political slugfests. A recent remark by the Tamil Nadu Governor, RN Ravi, has ignited a fresh fire. While addressing civil service aspirants, Ravi had reportedly said that the protests against Sterlite, which led to the closure of the plant, were fully "foreign-funded". "Police firing that cost innocent lives was unfortunate. But they wanted it to be closed as Sterlite produced 40% of our copper," Ravi had reportedly said while responding to questions during the programme "Think to Dare" conducted inside the Raj Bhavan. The governor’s remark has sparked fresh controversy in the Tamil Nadu political circles.
When politics takes over, economics recedes deep into the background. Even as the country’s highest court is still seized of the issue, the slugfest over the Sterlite Copper plant has caused immense damage to the country’s trade matrix in this commodity. Domestic copper production fell significantly from FY19 onwards as a result of the shutdown of the Sterlite Copper plant. Lower refined copper production has triggered a huge deficit in the domestic market, resulting in large quantities of copper imports for the fifth year in a row. The copper imports for FY23 were 270,424 tonnes, while exports dropped drastically to 40,964 tonnes—the lowest ever since FY18. Given the healthy copper demand outlook in the domestic market, the deficit situation is unlikely to improve in the near term.
With a decline in copper exports, India will experience reduced revenue from the international market. This can negatively impact the country's overall trade balance and foreign exchange earnings. It also makes the country vulnerable to fluctuations in international prices and supply disruptions, potentially affecting industries that heavily rely on copper, such as electronics, electrical equipment, construction, and manufacturing. This is not a healthy scenario for the country, with copper being the new oil in the green energy transition.
India, as a country, is legendary for its bloated human resources. With a population of over 130 crore, no government—be it at the centre or in states—can afford to lower its priority on job creation for the masses. Given the socioeconomic context of the country, a balance between development and the environment is a prerequisite for secular progress. It is not so much about this or that. It is very much about this and that. A middle path must necessarily be found between green concerns and growth issues. This calls for statesmanlike political leadership and a professional bureaucratic setup.
Sterlite appears to be a classic case where the political leadership high jumped to extreme action. As the reality of the situation unfolds before them, political mandarins find themselves caught in an irretrievable mess. Indeed, it was like Abhimanyu’s entry into Chakravyuh in Mahabharat. He perished in the battlefield because he didn’t know how to exit. The Sterlite episode has sort of forced investors into circumspection. Citing the Sterlite imbroglio, a rifle project was moved to Amethi by Russia. Playing to the gallery has its own price. To be sure, the one-upmanship indulged in by the two principal parties in Tamil Nadu is not doing any good for the cause of industrialisation of the state.
KT Jagannathan is a senior financial journalist based in Chennai. He has been in business journalism for over three decades, covering corporate developments and critical industry verticals. He is the co-founder of www.carnaticdarbar.com, a news website for Carnatic music, a niche art form. He is also learning the wind instrument flute.
The views expressed here are those of the author and do not necessarily represent the views of BQ Prime or its editorial team.