Chennai/Mumbai/New Delhi: Vedanta Ltd. will have to keep its plans to resume operations at its copper smelter in India on hold for longer after a local court rejected an appeal to restart the plant.
The Madras High Court on Tuesday refused permission to restart the plant in southern India’s Tamil Nadu state. The order said a decision on a petition to the demolish plant hadn’t been decided.
“Economic considerations can have no role to play while deciding the sustainability of a highly polluting industry and the only consideration would be with regard to safeguarding environment for posterity and remedying the damage caused,” the court said in its order, in response to Vedanta’s claim that shutting the plant will affect the economy.
Billionaire Anil Agarwal’s commodities producer stopped operations at the smelter for maintenance in March 2018 and later extended the shutdown due to mounting opposition from villagers against pollution caused by the plant. The state government closed the smelter two months later after more than a dozen people died when police opened fire on protesting villagers.
After multiple court hearings, including a favorable verdict for Vedanta by the National Green Tribunal, the Supreme Court last year stalled the reopening further, saying the green tribunal didn’t have the jurisdiction to decide on the matter. It directed the company to file a petition with the state’s high court.
Vedanta firmly believes in the “safe and environmentally sound nature of our operations,” the company said in a statement, adding its options include appealing to the nation’s top court.
The closure of the smelter has “significantly” cut India’s copper cathode production, according to the nation’s mines ministry. The latest order will keep supplies from India muted in the global market and underpin prices of the metal, which have rallied almost 40% since March on the London Metal Exchange.
“The plant staying shut longer doesn’t augur well for the company as copper prices have been doing well,” according to Sanjiv Bhasin, executive vice president at IIFL Securities Ltd. “There will be a review of the order, but in the short-term it will be a little bit negative for the company.”
Shares slumped as much 6.1% after the order, the most since May, but pared losses to close 0.9% lower in Mumbai.
The judgment comes as parent Vedanta Resources Ltd. prepares to launch a formal offer to buy back the shares it doesn’t already hold of the Indian unit. The proposed delisting is part of Chairman Agarwal’s plan to simplify his investments across a complex multi-tiered corporate structure.-Bloomberg
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