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Sterlite Fined $18 Million for Breach, Unit to Remain Shut

April 2 (Bloomberg) -- Sterlite Industries (India) Ltd., facing two charges of environmental breach at its copper smelter, was fined 1 billion rupees ($18 million) in one case and must keep the plant shut pending clearance of the other.

The company, controlled by billionaire Anil Agarwal, is free to operate the smelter in Tamil Nadu state, the top court ruled today in its final judgment, overturning a lower court order of September 2010. Still, the state pollution control board and state government’s order to shut the plant following a gas leak on March 23 will remain for now.

The smelter, operated by the nation’s biggest copper producer, has faced controversy since at least Sept. 28, 2010, when the Madras High Court ruled the 400,000 metric-ton facility should be shut for environmental breaches. The pollution board on March 30 ordered the closing of the smelter for emitting high quantities of sulfur dioxide, affecting the inhabitants of the area. The unit was completely stopped on March 31, Ashish Kumar, district collector at Thoothukudi, where the factory is located, said by phone today.

“Sterlite will continue to work in close association with the state government of Tamil Nadu and other regulatory bodies to maintain the highest standards of health, safety and environment,” spokesman Pavan Kaushik said today in an e-mailed statement.

Today’s Supreme Court ruling has no bearing on the order by the pollution board and the state government, said a two-judge panel, headed by A.K. Patnaik. The top court also imposed a fine on Sterlite for polluting the environment and asked the pollution board to periodically monitor the plant’s emission levels.

The shares, which had declined 4.5 percent yesterday, rose 4 percent to 93.10 rupees at close of trade in Mumbai. The key Sensitive Index of the Bombay Stock Exchange gained 0.9 percent.

Sterlite is contesting the pollution board’s order in the National Green Tribunal, Press Trust of India reported yesterday. India is tightening rules to protect ecologically sensitive regions, prevent illegal mining and safeguard resources and the livelihood of people living around mines and factories.

Sterlite’s plan to double the Tuticorin smelter capacity to 800,000 tons has been delayed, according to the latest annual report. The smelter mainly uses imported copper concentrate.

To contact the reporters on this story: Abhishek Shanker in Mumbai at ashanker1@bloomberg.net; Pratap Patnaik in New Delhi at ppatnaik2@bloomberg.net

To contact the editor responsible for this story: Jason Rogers at jrogers73@bloomberg.net

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