Vedanta says Indian copper smelter shutdown causing deficit, price rise (updated)

Precision Wires India

18/05/2018 15:59

(Adds details)
    NEW DELHI, May 18 (Reuters) - Vedanta Resources Plc's
 VED.L  shutdown of its South Indian copper smelter, one of
India's biggest, is causing a copper deficit and increased
prices in India, its subsidiary Vedanta Ltd said on Friday.
    The smelter, located in a sleepy port city near the tip of
the Indian peninsula, has a share of about 35 percent in the
India's primary copper market and exports mainly to Gulf and
Asian countries, Vedanta said. 
    The unit has been shut for more than 50 days.
    "Due to non-availability of our production, there is a
deficit of copper supply in the country impacting prices and
availability," Vedanta Ltd said in a statement on Friday.
    The plant, which can produce 400,000 tonnes of copper a
year, will remain shut until at least June 6 as the local
pollution regulator will not allow it to operate due to alleged
non-compliance with environmental rules.  urn:newsml:reuters.com:*:nL3N1SO3FM.
    Copper prices hit more than six-year lows in 2016 but have
gained more than 50 percent from those levels. The benchmark
three-month copper contract on the London Metal Exchange  CMUC3 
was trading at $6860.50 at 1351 GMT.
    The company said the shutdown was also causing an increase
in the price of sulphuric acid, a smelting byproduct used to
make fertilizers. 
    The smelter, controlled by the company's majority-owned
Indian subsidiary Vedanta Ltd  VDAN.NS , has been the target of
protests by the people of Thootukudi, where the plant is
located. They have thronged the streets and shut shops demanding
a closure of the plant.
    The plant was shut for more than two months in 2013 by an
Indian environmental court after complaints from residents over
emissions. Locals and environmentalists have said Vedanta's
smelter is a major source of pollution and a risk to fisheries.
    Vedanta says the protests are based on "false allegations"
and plans to double capacity at the smelter to 800,000 tonnes
per year.
    Cable makers in India, such as Finolex Cables Ltd  FNXC.NS 
and Precision Wires India Ltd  PRWR.NS , have traditionally
bought copper from the two biggest producers, Vedanta's Sterlite
and Aditya Birla Group's Hindalco Industries Ltd  HALC.NS .
    Copper is mainly used to make wires and cables and to make
electronic devices, transformers and motors.
    Based on current local demand growth of 7-8 percent per
year, India may turn into a net importer of copper by the year
ended March 2020 if no new plant is commissioned, consultancy
firm ICRA Ltd said in a report last month.   

 (Reporting by Sudarshan Varadhan
Editing by Alexander Smith and Jane Merriman)
 ((Sudarshan.Varadhan@thomsonreuters.com; +911149548059;
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