Supreme Court Delivers Final Verdict On Vedanta's TN Sterlite Copper Smelter; Rejects Plea For Reopening

On February 29, the Supreme Court quashed Vedanta's plea to reopen its Sterlite copper smelter plant in Tamil Nadu, marking the end of a prolonged legal battle. The court's ruling emphasized the paramount importance of sustainable development and the well-being of local residents, citing Vedanta's repeated non-compliance with legal obligations.

After a five-day hearing, the bench led by Chief Justice of India DY Chandrachud underscored the company's failure to adhere to essential legal requirements. These included the failure to remove copper slabs from nearly 11 sites, non-compliance with consent conditions for gypsum operations, and the inability to secure authorization for hazardous waste disposal.

While acknowledging the plant's significant contribution to the region, the court reiterated the necessity of prioritizing environmental and public health concerns. Chief Justice Chandrachud remarked, "Closure of the industry is undoubtedly not the first choice, but the repeated breaches of law and regulations left us with no alternative."

During earlier hearings, the court had proposed the formation of an expert committee to assess the feasibility of reopening the plant. Vedanta had agreed to this suggestion, proposing specific parameters for the committee's evaluation. However, both the government of Tamil Nadu and the Tamil Nadu Pollution Control Board (TNPCB) opposed the idea of setting up such a committee.

The Sterlite Copper plant faced closure in 2018 when the Tamil Nadu government, citing environmental norm violations, ordered its shutdown. The decision came after violent protests against the plant led to 13 deaths due to police firing. At that time, the plant accounted for 40% of India's copper output, producing over 4,00,000 tonnes of metal ores annually and providing direct and indirect employment to 5,000 and 25,000 people, respectively.

Vedanta, the parent company, contested the government's decision, and the National Green Tribunal (NGT) initially allowed the plant to reopen, considering the closure disproportionate. However, the Supreme Court overturned this decision, directing Vedanta to seek relief from the Madras High Court.

Despite efforts, neither the Madras High Court nor the Supreme Court permitted the plant's reopening. Vedanta subsequently filed a plea seeking periodic access to carry out essential maintenance work due to the plant's reported deterioration.

In April 2023, the Supreme Court granted Vedanta permission for maintenance work based on a report from a high-power Committee (HPC) formed by the Government of Tamil Nadu. The HPC inspected the structural and civil safety of the plant, allowing Vedanta limited access for maintenance purposes.

Following the Supreme Court's decision, Vedanta's shares were observed trading with minor gains of 0.3%, standing at Rs 268.70 per share on the National Stock Exchange (NSE) as of 11:30 am. However, over the past year, the stock has seen a decline of nearly 4%.

The verdict has significant implications not only for Vedanta but also for the copper industry in India. With the closure of Sterlite Copper, the country is set to experience a shift in its copper production landscape. The ruling also underscores the judiciary's commitment to upholding environmental regulations and ensuring the welfare of local communities.