Sterlite May Lose 23,000 Tons Copper After Shutdown

By Thomas Kutty Abraham

Nov. 24 (Bloomberg) -- Sterlite Industries (India) Ltd. expects to lose 23,000 metric tons of copper production for a month after damage to a cooling tower shut its southern Indian smelter, the nation’s biggest, said a company executive.

The company’s sole 400,000-ton smelter in Tuticorin will be closed for about a month, the official, who requested not to be identified, said in telephone interview today.

The main cooling tower was damaged Nov. 19 and the company is making efforts to “rectify” the damage, Sterlite, a unit of London-listed Vedanta Resources Plc, said in a statement to the Bombay Stock Exchange earlier today.

Copper futures trading in New York are down by almost half this year as the world economy slipped into a recession. World copper output exceeded usage by 75,000 tons in the first eight months, compared with 22,000 tons a year ago, the International Copper Study Group said Nov. 21.

Sterlite is examining if it needs to declare a force majeure, a legal clause that will allow it to miss deliveries to customers because the equipment failure will cut output, the official said. The Mumbai-based company may not take delivery of “some” copper concentrate because of the shutdown, the official said.

The company buys 1.3 million tons of concentrate a year, of which 75 percent comes from long-term contracts, according to a presentation on its Web site.

Copper concentrate is a semi-processed form of copper ore used as a feedstock by smelters.

Copper for three-month delivery fell as much as 2.8 percent to $3,440 a ton on the London Metal Exchange today and traded at $3,475 at 12:09 p.m. Mumbai time. The metal is headed for the first annual drop since 2001.

Sterlite shares declined as much as 5.8 percent to 205.25 in Mumbai trading and were at 208.55 rupees at 12:42 p.m. local time. The stock has tumbled 79 percent since January, exceeding the 56 percent drop in the benchmark Bombay Sensitive Stock Index.

To contact the reporter on this story: Thomas Kutty Abraham in Mumbai at tabraham4@bloomberg.net.