The Vedanta-owned Sterlite Copper smelter is up for sale, more than four years after it was shuttered as activist-led protests over alleged pollution from the plant turning violent.
Vedanta Limited has invited expressions of interest for its copper smelter at Thoothukudi in Tamil Nadu in conjunction with Axis Capital. It published advertisements in newspapers on Monday inviting bids with a deadline of July 4.
The offer includes the sale of the copper smelter complex, sulphuric and phosphoric acid plants, copper refinery, a captive power plant and a residential colony, among other associated infrastructure.
The mining and metals firm’s stock was hammered in the markets on Monday, closing 12.67% lower on the BSE at Rs 230.25.
Sterlite Copper has an integrated capacity of metric per annum (MTPA) of copper smelting and refining, as per the advertisement. That is equivalent to about 40% of India’s copper needs, the company said, adding that another 400,000 MTPA of production capacity was under expansion.
The decision to sell the plant may not be purely financial, said experts.
The capital employed for the plant is around 1% of Vedanta’s consolidated capital, said Ritesh Shah, head of mid-market research coverage and ESG at Investec India. Selling the asset would have a marginal bearing on consolidated financials, he said. The closed plant is causing a loss of about Rs 180 crore a year at an EBITDA level to Vedanta, whose consolidated EBITDA in 2021-22 was Rs 45,319 crore.
In 2018, protests outside the plant turned violent with 15 people losing their lives to police fire. The state pollution control board later sealed the plant following directions from the Tamil Nadu government.
Reactions to the announcement in Thoothukudi ranged from shock to hostility. Locals said that the episode was still a painful scar in their memory. Activists, including MDMK leader Vaiko, said they would not allow even a new owner to run the copper smelter in view of the environmental concerns.
The company has dismissed all allegations of pollution from the plant and maintains that it is compliant with all environmental norms.
“The Tuticorin plant is a national asset which has been catering to 40% of our national demand of copper and has played an integral role towards India’s self-sufficiency in copper. In the best interest of the country and the people of Tamil Nadu, we are exploring options to make sure that the plant and the assets are best utilized to meet the growing demand of the nation,” the company said in a press statement.
Vedanta has challenged the plant’s closure in Madras High Court as well as the Supreme Court of India, but little progress has been made. The matter is currently sub judice before the apex court.
In a recent interview, Sunil Duggal, the group chief executive officer of Vedanta Limited, said that he was hopeful of a favourable hearing.
“It has been more of a social and political issue. We believe we should be able to sort it out,” he told ET.
V Ramasubbu, a lawyer in southern Tamil Nadu, said he was taken aback by the advertisement from Vedanta, given that the company is fighting tooth and nail in the Supreme Court for the reopening of the plant.
E Athisiya Kumar, a lawyer who had appeared in court against police arrests in Thoothukudi after the crackdown, said the locals regarded Vedanta’s decision to sell the factory with a lot of doubt. “We will wait and watch as to why the company has arrived at this decision,” he said. (Economic Times)