Production of refined copper has slumped by 47.1% during the first quarter of FY19. This is primarily attributed to the shutdown of the 400 KT (kilo tonne) Thoothukudi smelter of Sterlite Copper, which accounted for 40% of the country’s copper smelting capacity.
Domino effect
The decline in domestic production has led to a domino effect on the trade front. There has been a sharp increase in import and a fall in export of refined copper. Exports have shrunk by 91.6%, while imports have increased by 221.6% in the first quarter of FY19, an analysis by CARE Ratings shows.
This is in stark contrast to the first quarter of the previous financial year, where exports increased by 70.1%, while imports fell by 69.9%. India used to be the net exporter of refined copper.
During the quarter, the output of two other companies — Hindustan Copper and Hindalco — also saw constraints due to the shutdown of their smelters for maintenance.
The managing director of an MSME based in Chennai said that since the closure of Sterlite Copper, production at his firm had been impacted. “We make materials on the electrical space and copper is a key ingredient for us. The cost of copper has pinched us badly in the last two months,” he said, requesting anonymity.
Coimbatore Pioneer Fertilizers Ltd., a manufacturer of single super phosphate fertilisers, is also feeling the pinch of Sterlite’s closure and is working at a very low capacity using alternative source (spent acid) for its sulphuric acid requirement, which was hitherto met by Sterlite. “We are now operating at low capacity [just under 25%],” a top company source said.
Amrita Chemicals, a manufacturer and exporter of sodium silico fluoride, is facing a huge penalty for it inability to meet its contractual export obligation in the wake of the Sterlite imbroglio.
Similarly, Shree Annam Chemicals, a manufacturer of animal feed, has been forced to cut down on its operations in the wake of non-availability of a critical input in the wake of the Sterlite’s closure. Sources said the company has to rely on imports which has cost implications for the end consumers who are farmers. A leading chemical trader in Chennai said that the prices of sulphuric acid had double since the closure of Sterlite unit, which is the lone producer in the South.
