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Stinging Sterlite

Tamil Nadu’s economy has not been in the pink of health. The emphasis on welfare, through populist schemes, has not been backed by the massive increases in revenue. In recent years, there have not been big-ticket investments necessary for accelerating industrial and employment growth. Continuing large deficits, both revenue and fiscal, have also been denying investments for infrastructure development.

The dissensions and instability of the ruling AIADMK, post the death of supremo J Jayalalithaa. Ambitious politicians of different hues each aspiring to become chief minister, point to the vacuum at the top. This is unlike the past when decisive leadership was a strong point for the stability of the administration with leaders – C N Annadurai, M Karunanidhi, M G Ramachandran and J Jayalalithaa – commanding unquestioned authority among the cadres.
These factors have resulted in Tamil Nadu emerging the agitation state of India accounting for the largest number of agitations. The intensity and the frequency have increased manifold through 2017-18. The recent 100-day long agitation in Thoothukudi demanding the closure of the Sterlite copper plant, climaxed to a violent protest marked by arson and death of 13.
Sadly, the action of the government appears a knee-jerk reaction. One day it was permanent closure of the plant and the following day it was cancellation of land allotted for the unit for its expansion.

The first significant investment post 1991

In 1991, Sterlite marked the first significant investment in the state post-liberalisation of the economy in 1991. This was followed by prestigious big-ticket investments in Tamil Nadu by multinationals like Thapar DuPont, Ford Motors and Hyundai Motors in quick succession. With numerous ancillaries spawned by these, especially in the automobile sector, the state emerged a formidable leader in manufacturing, next only to Maharashtra. For 15 years the state recorded high rates of growth reaching full levels of employment. In fact, the state provided large-scale employment in construction, hotels, manufacturing, and marine food processing industries for workers from the east and north-eastern states. Incidentally, at the large textile unit in Coimbatore, Kannabiran Mills, the entire women employment, numbering around 1400, comprised of workers from outside the state!

Centre and state governments have cleared the project

Successive governments both AIADMK and DMK at the state level and NDA and UPA, at the Centre, have cleared the various stages in the growth of Sterlite Industries owned by the multinational Vedanta Resources Plc. The unit accounts for 400,000 tonnes out of a total installed capacity of copper in the country of 990,000 tonnes. Apart from meeting the requirements of copper used widely by the electrical, appliances and automobile industries, the company has also been a significant exporter of copper refined from imported concentrates.
The primary issue involved relates to pollution. The solution lies in tackling the problem by ensuring zero discharge of pollutants and not closing down production which is like throwing the baby with the bath water.

Dr T Ramasami saved hundreds of tanneries and thousands of jobs…

There have been several success stories in this regard. In 1995, the Supreme Court ordered the closure of 700 leather tanneries for the pollution caused by them. In a collaborative effort, CSIR’s Central Leather Research Institute (CLRI) and the National Environment Engineering Research Institute (NEERI) under the leadership of distinguished scientists like Dr T Ramasami, implemented cleaner technology measures and in-plant pollution control techniques in quick time. The scientists succeeded in converting the waste in the effluents discharged to wealth, by recovering precious chrome and ensuring zero pollutants in the discharged waste liquids. Hundreds of tanneries and thousands of jobs were saved in the process. Similar success was reported from textile dyeing units.
Thus, it should indeed be possible to address the issue of toxic effluents from the copper plant. In fairness, the plant should have been put on notice to attend to this before ordering permanent closure.

Why not an expert team of scientists appointed?

Incidentally such mob action was witnessed at Kudankulam. An assortment of interest groups with liberal foreign funds, indulged in months-long agitations against the large Russian-aided nuclear power plant. This, despite several leading scientists, including former President Dr A P J Abdul Kalam leading a spirited campaign on the safety of nuclear power. J Jayalalithaa appointed a committee of experts that included scientists, administrators and men concerned with environment issues. On the report of the committee, she took strong action to dismantle the agitators. The result: The KNPP has already earned the entire investment made of around Rs 15,000 crore. The 2000 MW power plant has contributed to a power-cut free Tamil Nadu and is slated for doubling its capacity.
The current government could have followed such an approach during the 100-day long agitation in which political parties in opposition found an excellent opportunity to fish in troubled waters. Look at the speed with which Kamal Haasan rushed to Thoothukudi and lent his weight! Soon, Rajinikanth followed suit.
The company needs to take a good share of blame for this crisis. Like most of the family-owned businesses of Tamil Nadu, it failed miserably in the opaqueness of its social concerns and poor communications with employees, policymakers, media and the public.

DuPont’s Sam Singh provided a ready model…

Contrast this with the shining example of Thapar DuPont. How beautifully its head Sam Singh won social acceptance and admiration! The company had a similar history of being forced out of Goa and shifting to Tamil Nadu. From day one. Sam Singh focused on cultivating the locals around the plant. He provided training facilities for women, imparting skills in tailoring, nursing… adopted local schools, took care of water supply to villages around, inculcated safety in construction… Remember the advertisement showing a woman worker engaged in constructing the factory, wearing a helmet? In frequent meetings with the media, Singh explained the contributions of the 300-year-old DuPont on social amelioration. Long before the commencement of production, the company created a highly positive public image. Ford Motors also built such a picture taking care of the community around Maraimalainagar. Why Sterlite that has invested over Rs 3000 crore didn’t emulate this ?
Sterlite could have taken a leadership position in tackling the water problem of the town by setting up a desalination plant on its own. With three large capacity power plants and with a plethora of captive power plants, energy should not have been a problem.

Impact on JOBS…

The company employs 3000 directly and over 20,000 indirectly. The high volume of material handled – about 500,000 tonnes of concentrates and other raw materials for the smelter, phosphoric and sulphuric acid plants moving in and 400,000 tonnes of finished products moving out- offered employment to several thousand on transferring these. Look also at the army of men working in canteens and other service industries. Thus an estimated 25,000 plus have been earning their livelihood on decent remuneration. With five members per family, this would account for 125,000 people dependant on Sterlite. Why no one factored the impact on these to counter the opposition by a few thousand outsiders? Thoothukudi cannot provide alternative employment on comparable wages to these.

Why industry associations were silent?

Equally disappointing is the indifference and unconcern of industry associations and business leaders not raising their voices. More than other sections, they should be aware of the risk involved in demand by a motley group of protesters demanding closure on some ground or other. ASSOCHAM, CII, FICCI and dozens of other industry associations should have raised their voice in support of the industrial unit right from the start. This again points to poor networking of Sterlite.

Impact on inflation…

In India, there are just three large units in the organized sector producing copper. The closure of Sterlite is bound to impact severely on hundreds of copper consuming industries and, in turn, buyers of automobiles, appliances, motors, pump sets…
Tamil Nadu has been facing stiff competition from neighbouring Andhra Pradesh. In recent months Sri City, across the northern border, has already been attracting some of the prospective investments from Tamil Nadu: Hero Motors, International Flavours & Fragrances, Blue Star and Krea University are some of these. Several business houses of Tamil Nadu have been locating their expansion outside the state. The Murugappa group, which once had over 70 per cent of investments in Tamil Nadu, today accounts for just around 35 per cent.
Political leaders cutting across party lines should look at the damage caused over the long term by routine opposition to any and every action of the government. Is Tamil Nadu with its fame and record of a highly industrialized state, going the way of Kerala and
West Bengal?

CHEQUERED PAST: NOT A NEW ‘KOLAVERI’

Sterlite Copper had to move from Ratnagiri (Maharashtra) after prolonged objections by locals, to Thoothukudi in August 1994. The Ministry of Environment and Forests (MoEF) showed the green light and in 1996 the Tamil Nadu Pollution Control Board bestowed the licence to operate.
Subsequently, inhabitants started complaining of health issues such as headache, cough, congestion, choking, cancer, skin diseases… Doctors who met patients from the villages complaining of these syndromes named these indications as ‘Sterlite symptoms’ and blamed them on the effluents from the factory. This caught the attention of politicians led by MDMK leader Vaiko who began to organise protests by the community with the help of conservationists and ecologists.
In November 1998, the Madras High Court ordered the plant to be closed; but a week later, the court permitted the plant to operate again, meanwhile asking the National Environmental Engineering Research Institute to conduct a study of the region. That turned out to be a clean chit for Sterlite.
Twelve years later, the Madras High Court ordered the closure of Sterlite Copper, citing defilements of law and for polluting the environment. However, the Supreme Court stayed the order.
In April 2013, the court slapped a fine of Rs.100 crore on Sterlite Copper but refused to shut it down.
In July 2017 the company got the permission from the MoEF to start another plant, and the recommended disapproval for the new construction ballooned into a rage that led to ‘Black May Days.’
Thus, Sterlite has been at the heart of the debate on ‘clean industries’ for decades now.
Sterlite episode has also definitely damaged the brand image of Vedanta group. This lousy chapter has not only miffed the image of Anil Agarwal but also cautioned the investors to be more vigilant when the entity chalks out its next plans and policies. The globally diversified natural resources company and its subsidiaries have been accused of environmental norm violations both in India and overseas. The Chhattisgarh Environment Control Board served a notice on Bharat Aluminium Company to close its plant allegedly violating green norms. In Zambia, Vedanta owned Konkola Copper Mines faced protests from residents as the waste from its mine was allegedly polluting water bodies. In Goa, where Vedanta has its iron ore operations, the Apex Court has quashed mining leases twice due to severe violations of environmental laws by the company.

Facts about the Orange Metal

Copper has multipurpose applications across utilities, heavy industry, transport and communication. Therefore, the price of copper is considered to be an excellent indicator of the health of the global economy.
China, one of the fastest growing economies, consumes almost 50 percent of the world’s copper ore each year; so copper prices show a strong correlation with the Chinese economic growth.
Analysts believe that the meltdown in LME (London Metal Exchange) copper prices before 2008 were an early warning of the global financial crisis that unfolded that year.
The correlation between MCX Copper prices and the NSE 500 index for the period between 2015 and 2018 is a high 0.85 (a relationship of one indicates perfect relationship). This suggests that stock markets often move in tandem with domestic copper prices.
In India, the shutdown of Sterlite, which produces about 45 per cent of the country’s copper, changes the demand-supply dynamics and may send copper prices soaring.

STERLITE LOSES ITS STARLIGHT

The orange metal has been in the limelight for all the wrong reasons. Overnight, copper became a cropper. Suddenly the elegant ambiance of Tamil Nadu changed. 22 May became ‘Kaala (black) May 22’. Thoothukudi, the port town has become the new flashpoint between industry and environmentalists.
That day, a march was taken to observe the 100th day of the anti-Sterlite copper plant protests at Thoothukudi. The demonstration was against the waste generated by copper smelting. It turned ferocious when some dissenters chucked cordons positioned on the boulevard. Stones and chippings were lobbed. Automobiles were scalded. The police opened fire in different locations and 13 were dead over two days. The plant has been shut down and power supply cut off. The order permitting land in the SIPCOT industrial park annulled. A retired High Court judge has been appointed to probe the incident. Members of the NHRC have arrived to conduct their probe. Vedanta’s stock price crashed. Superstar Rajinikanth got a taste of politics when 21-year-old police firing victim asked ‘Who are you?’ at the Thoothukudi hospital.
The fierce nature of the protests and consequent government action have resonated the warning bells for entrepreneurs who have been hesitant to invest in the state of Tamil Nadu. The dreadful events leading to the unfortunate deaths during the anti-Sterlite protests once again bring into sharp focus the issue of how large industries are failing to manage the operating environment. Abortive dialogues compound the situation with aggrieved stake-holders, the breakdown of grievance-redressal structures and lack of confidence. It is true that lack of communication creates a vacuum which, if left unchecked, gets filled with poison and disaster.
The Thoothukudi incident is a lesson in how not to handle a popular protest. Discontent should be tackled before it goes out of control. Conflicts can be resolved and intelligence failure can be erased if the interested parties do not delay the action to be implemented. Corporates should not ignore local opinions and must devise concrete strategies for resource replenishment and reintegration. They have to communicate those strategies to the locals and assure them that their resources are not being imperiled. Our environment-related institutions should take decisive action. The current episode of Sterlite reflects the deep-rooted disaster of environmental governance in India.
The government should remember that it would be madness to compromise the health of the residents and the environment for the sake of ‘ease of doing business.’ The ‘ease of living’ with clean air and water is equally important. The ladder of progress cannot be positioned on coffins.
Hope proper action will be taken by a complete set of interested stakeholders soon or else Tamils armed with traditional Parai drums continue shouting slogans, “Kekudha Kekudha, Tamizhar kural kekudha?” (Can you hear? Can you listen to the voice of the Tamils?) on the streets of ‘Pongal State.’
– Shivanand Pandit

VIEW FROM THE GROUND

Vedanta is a global company having its presence at many places having ISO audit, statutory audit in place. If environment is real concern it has to be looked into industry as a whole like CPCL, lignite, refineries, tanneries, mining, steel plants… An important point observed in the Sterlite protest is mostly the highly educated, legal experts have refrained from commenting adverse about shutting the plant. Most hue was from social media and commercial media. – SOUMYA MOHAPATRA

With Sagarmala or expressway projects, logistics should no longer be a challenge. Smelter operations can be done anywhere in India. With 28 other states in the country, what prevents them from jumping into this golden opportunity and offer Vedanta perks to move this factory to one of their states? Remember Nano factory moving from Bengal to Gujarat? Why is Sterlite an outcast for investment-seeking states? Why is no one interested?
Sterlite’s capital investment is five times than that on the Nano plant. There must be valid reason for states not to offer their own land for this. When my neighbours refuse trash, why should my land alone become a dump-yard is my question. I belong to Tuticorin. My relatives who have lived their whole lives there, have died of unknown tumors and cancers. My interest in the case is more personal. – MANOJ FERNANDO

Has operation of the Sterlite plant really affected the people surrounding the area? Has it created a health hazard? Sterlite is possibly the biggest puzzle no one will understand. It’s a huge investment, vetted well before start, with all sanctions and red tape plastered all over still, why is this company alone being targeted?
C S HARIHARAN

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