Sep 28 (Bloomberg) -- Sterlite Industries (India) Ltd., the nation’s largest copper producer, received a court directive today to shutter its only smelter as the government cracks down on factories breaching environment norms.
Workers at the copper refinery at Tuticorin in the southern Indian state of Tamil Nadu will have to be compensated, according to the judgment of the Madras High Court. The company is waiting for the full text of the court order before it decides on a future course of action, according to an e-mailed statement.
"The Tuticorin Smelter has been operating for more than 12 years and has been in compliance with necessary rules and regulations,” the statement said.
India is tightening environmental standards to prevent illegal mining and protect the resources and livelihood of the population living around the mines and factories. The government has rejected a proposal by Sterlite’s parent Vedanta Resources Plc to mine bauxite in the eastern state of Orissa and may scrap environment clearance for its existing aluminum refinery, hampering a planned $8 billion expansion.
Sterlite shares fell 0.9 percent to 176.25 rupees at the 3:30 p.m. close of trading in Mumbai. The key Sensitive Index of the Bombay Stock Exchange was little changed.
"There has been gross violation of environmental norms in the Sterlite project and the High Court’s order today has vindicated our stand,” said Fatima Babu, head of a women’s group opposing the copper project at Tuticorin. "We now seek criminal proceeding against the officials involved in giving clearance to the project in the first place.”
The copper smelter set up in 1996 at Tuticorin in the southern state of Tamil Nadu has a capacity of 400,000 metric tons. The company plans to double the capacity to 800,000 tons by middle of 2011, according to its annual report. The smelter uses concentrate produced from its mines at Tasmania and other sources. The copper business including rods, cathodes and chemicals generated sales of 125.4 billion rupees ($2.8 billion) last year, the report said.