Sterlite copper plant shutdown: Resurgence of political risk for industry?


Sterlite copper plant shutdown: Resurgence of political risk for industry?
The Tamil Nadu government’s order to permanently shut down Vedanta Ltd’s copper smelter is a reminder that policy and political risk lurks around the corner in India for companies that clash with the environment and local population’s interests. These risks are particularly elevated for industries such as mining, but even infrastructure projects such as ports are not immune.

In the Vedanta case, the copper unit contributed to only 5% of the company’s Ebitda (earnings before interest, tax, depreciation and amortization) in fiscal year 2018, so its temporary closure may not be very significant in financial terms. If the government succeeds in permanently closing down the plant, the company’s earnings will erode to that extent.

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