UPDATE 3-India's Sterlite Closes Copper Smelter on Court Order

NEW DELHI, Sept 29 (Reuters) - Sterlite Industries (STRL.BO) has shut the world's No. 9 copper smelter on a court order over environmental issues, the latest blow to India projects for its parent Vedanta (VED.L), whose shares fell nearly 5 percent.

The Tuticorin plant in south India produced over 334,000 tonnes of copper cathode in the year to March 2010, almost half of India's total output of over 683,000 tonnes, and its closure helped push international copper prices to five-month highs.

"The copper market was already looking tight, this will only add to that sense of market tightness," said David Wilson, analyst at SocGen.

Three-month copper on the London Metal Exchange CMCU3 rose to $8,038 a tonne, its highest since mid-April, before declining to $8,019 by 1025 GMT. [MET/L]

Sterlite's first-half attributable core earnings (before interest, tax, depreciation and amortisation) could be hit to the tune of $67 million, analysts at Liberum Capital said in a note.

Shares in Vedanta, which owns 54 percent of Sterlite, were down 4.69 percent at 2,155 pence at 0942 GMT, while Sterlite shares fell 8.27 percent to 161.80 rupees.

The closure of the smelter could hit sentiment around Sterlite more than actual income, Citi analysts said in a research note.

"While the profit impact may not be very significant given the low copper TC/RC (treatment and refining charges) margins, the announcement is negative for sentiment ... given the recent environmental issues surrounding Sterlite and its associate companies," the note said.

London-listed Vedanta, whose business focuses on India, has already run into obstacles in other projects in the country.

The Indian government rejected its plans to mine bauxite in Orissa over environmental concerns, and at the beginning of this month the environment ministry said it had found "serious violations" of green laws at its alumina refinery in eastern India.

Vedanta is also trying to push through a $9.5 billion acquisition of a major stake in Cairn India, a unit of London-listed Cairn Energy (CNE.L).