As per a report published by China Economic Net, copper export from Pakistan to China has increased by around 400 percent. Pakistan exported copper worth 550 million dollars in 2019, compared to 106 million dollars export in the year 2018.
The production capacity of Pakistan has increased, thanks to ‘Reko Diq project’, the disputed mining site in Balochistan, where the Chinese companies started production last year. Its copper became competitive in the international market due to the closure of Vedanta’s Sterlite Copper plant in Tamil Nadu.
Metallurgical Corporation of China (MCC) said that they would take the total exports to 10 billion dollars, once the mining site dispute settles down. Chinese officials also bragged that 87 percent of the total employees of the project are local people. The Director of Administration Office, Song Guozhao, said, “By the end of February 2020, the project has a total of 1,977 employees, 256 Chinese and 1,721 Pakistani, of which the number of local employees accounts for 87% of the total.”
It is evident that China and Pakistan are benefitting from the closure of the Tamil Nadu based plant which accounted for 40 percent of Indian’s total copper production and more than half of total exports.
Majority of India’s copper exports went to China (75 per cent) and Taiwan (13 per cent). The closure of Sterlite’s plant benefitted Chinese companies which were facing a tough competition from Indian exports. Given the better quality of Indian product, Chinese consumers preferred Indian copper and this harmed the interest of the Chinese companies.
Earlier, Anil Agrawal led Vedanta Group had told Madras High Court that the anti-Sterlite protest was funded by Chinese companies which ultimately benefitted from the closure of the plant. Aryama Sundaram, the legal counsel for Vedanta Group, had claimed, “These companies promoted and funded the agitations and protests against Sterlite. India’s import bill for copper is $2 billion, the demand was being met by Sterlite earlier.”
The Tamil Nadu government had ordered the complete closure of the plant in May 2018. But the National Green Tribunal (NGT) cleared the reopening of the plant a few months ago. However, the Supreme Court overruled the NGT order and the plant remains non-operational. The matter is sub-judice and the case is pending in the Madras High Court.
It has been two years since the closure of Vedanta’s Sterlite plant in Tuticorin serving a clear example of how bad politics could lead to bad economics. The closure of the Sterlite plant has not only hurt the copper industry but also thousands of medium and small sector units whose businesses were dependent on Vedanta’s plant. The ‘negative spillover effect’ of the plant closure had an impact reverberating through the electrical industry, building and construction industry, automobile industry and consumer durable industry.
Since the closure of Vedanta’s plant, 38 percent of the country’s copper demand is being met through imports from foreign firms. From 2013-14 to 2017-18, the copper production grew at near double-digit (9.6 per cent) and suddenly output fell by 46 per cent in FY 19. The sudden closure of Sterlite plant halted production of 4 lakh tonnes of copper, as the company accounted for 40 per cent of the country’s copper smelting capacity. The total copper capacity of the country is around 10 lakh tonnes.
The company paid 2,200 crore rupees in tax to the government, and therefore, the closure of the plant is harming the union government too. The state governments should have a more cooperative attitude towards industries. Only initiatives from central government will not help in the economic rise of the country unless every state government is willing to cooperate.
