Environmental Study Looms Over Vedanta’s Copper Smelter

The future of Vedanta’s (LSE:VED) Sterlite copper smelter in Tamil Nadu state in India is fading fast.

On Monday (July 23), India’s junior minister for water resources, Arjun Ram Meghwal reported information from the federal pollution regulator, which said that there were high levels of heavy metals in most groundwater samples taken around the 400,000-tonne-per-year copper smelting facility.

Meghwal cited a study by the Central Ground Water Board that revealed ground water samples taken near the plant in Thoothukudi came back contaminated with iron, lead, fluoride, cadmium and nickel at levels “above the permissible limit for drinking water.”

Also present in samples were readings of chromium, manganese and arsenic above permissible limits.

The damning news does not bode well for the facility, which was closed indefinitely in May following deadly protests about pollution in the region.

The report appears to support the base claim by local protestors that the plant was polluting the region and harming their health.

Immediately following the protests, and when closing the plant, deputy chief minister of Tamil Nadu, O. Panneerselvam, said that the government was responding to the will of the people, saying “today, the main demand of the people is that the copper plant should be permanently closed. In keeping with their demand, it is shut now. I would like to make it clear that Sterlite plant will be permanently shut,” he said.

Plans to double capacity at the 400,000-tonne-per-year smelter proved more than a step too far for locals, who have long protested against its operation in the South Indian state, claiming that pollution from the plant was affecting health and negatively impacting important fisheries.

Pollution from the 22-year-old plant has long been an issue of contention between locals and the company, which strenuously denies accusations levelled at the plant.

In a statement to Reuters in May, Vedanta called the permanent closure an “unfortunate development.”

Sources revealed the company was preparing a legal challenge at the time.

Vedanta vowed to study the closure order from the state government and would “decide on the future course of action”—however with the ground water study options appear to be diminishing.

Vedanta is yet to respond to the latest developments, but its most recent press release was an FAQ published in June “strongly reject[ing] these unfounded allegations” about pollution from the Sterlite plant and any breaches of regulations.

On Monday, Vedanta shares trading on the London Stock Exchange closed 1.02 percent below where they started for the day, ending at GBX 769.4.

Since the beginning on 2018, the share price of the sprawling company has fallen by 7.3 percent.

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Securities Disclosure: I, Scott Tibballs, hold no direct investment interest in any company mentioned in this article.