MUMBAI (NewsRise) -- An Indian environmental court allowed Vedanta to resume operations of its copper smelter in southern Tamil Nadu that had remained shut for more than six months following a state government order amid allegations of pollution."The National Green Tribunal has directed the Tamil Nadu Pollution Control Board to pass fresh order of renewal of consent and restoration of electricity supply for our operation within three weeks from the date of the order," Vedanta said in a statement Saturday. The company will take the necessary steps to restart the operations as per the court's guidelines, it added.
In May, billionaire Anil Agarwal's company was forced to permanently shut its Sterlite copper smelter in Thoothukudi in Tamil Nadu that produced 400,000 tons a year, after protests by environmentalists turned violent. As many as 13 people were killed in an ensuing police shootout. Following the incident, the state government cut off the power supply to the smelter, India's second-largest.
The smelter had not been operational since March as the state pollution control board refused to issue its consent for operating the plant. The plant shut down led to a potential revenue loss of $210 million a month, casting a shadow over the company's overall financial performance over the past few quarters.
According to local media reports, the Tamil Nadu government is likely to challenge the tribunal's order in India's Supreme Court.
Kotak Institutional Equities said if Vedanta's copper smelter restarts early next fiscal year beginning in April, the consolidated operating earnings estimate can increase 5% and earnings 8%.
"We perceive this as a positive step in the larger context of environmental, social and governance headwinds that Vedanta was facing," Edelweiss Securities said in a report.
Vedanta faced another major setback in India in February, when it was forced to close down its iron ore mine in the western Indian state of Goa after the Supreme Court quashed all iron-ore mining permits and mining in the state. The company had then said it will take impairment charges worth up to $600 million due to the mining ban.
To be sure, Vedanta has been able to limit the impact of the smelter shutdown with an expanded output of zinc, aluminum, and oil and gas. The three operations accounted for close to 85% of Vedanta's operating earnings.
The volume growth outlook for zinc and oil and gas operations over the next two years look "strong," Kotak Institutional said. Further, the company is also likely to gain from the improving outlook of global aluminum markets led by a persistent deficit in the world market, excluding China, the brokerage added.
Shares of Vedanta closed up 2.2% in Mumbai trading on Monday, while the benchmark S&P BSE Sensex gained 0.9%.
--Dhanya Ann Thoppil