Chennai, May 19: Tamil Nadu is facing an acute shortage of sulphuric acid, which in turn is having an adverse impact on many downstream industries like fertilisers, chemical, pharmaceutical, detergent, paper and pulp manufacturers.
This shortage of supply, primarily due to the closure of Sterlite Copper factory in the State, has forced many industries either to shut down, cut production, or look at other costlier alternatives for survival in the State, NS Venkatraman, former Secretary of the Chemical Industries Association (CIA), and an independent consultant, said in a statement here today. Before its closure, the Sterlite Copper plant in Thoothukudi supplied sulphuric acid, a byproduct of copper manufacturing, to a major chunk of the Tamil Nadu market.
Sterlite Copper was producing one million ton per annum and contributing 8.3% of the country’s total sulphuric acid production before its closure. It was also catering to the needs of 27 sulphuric acid customers as the largest supplier in southern India, with 95% market share in Tamil Nadu, he said, adding, this lack of supply to Tamil Nadu has also increased the cost of sulphuric acid phenomenally–from Rs 6 to Rs 7 per kg to Rs 20 to Rs 30 per kg–because the downstream industries are forced to import their requirements from different
countries”.
Moreover, despite the presence of three other sulphuric acid producing plants in the state– Green Star Fertilizers Limited, Coromandel and Andhra Sugar–downstream industries were forced to continue to import because most of the produce from these three plants are used for captive consumption.
The rising import of sulphuric acid and the steady increase in its prices over the years only corroborates Mr Venkataraman’s statement. Imports of sulphuric acid have been rising steadily from 9.46 lakh metric tons in 2017-18 to 19.21 lakh metric tons in 2021-22, an increase of nearly 51%.
Similarly, the country’s sulphuric acid import bill has increased from USD 89,450,113 in 2017-18 to USD 23,15,59,272 in 2021-22, again a massive jump of 61%. The cost per metric ton too has shot up from Rs 11,000 in April 2018 to Rs 16,400 in April 2022, again a hike of 33%. And, the country’s dependency on countries like South Korea, Japan, China is only likely to grow in the coming years as rising demand will outstrip supplies putting additional pressure on the government’s exchequer, Venkatraman said.
He said the problem for Indian downstream industries is further compounded by the fact that there is no viable alternative to sulphuric acid and hence many of these industries are now forced to contemplate investments into Sulphur burning plants for their raw material requirement. The supply side constraints will get further accentuated as the demand increases from the existing and newer industries.
“Sulphuric acid demand is forecasted to grow by 6% to 7% annually,” he said. Tamil Nadu-based Amrita Chemicals, once the country’s top exporter, manufacturer and supplier of sodium silica fluoride chemicals, potassium silica fluoride chemicals etc. with markets spread across the world– US, many countries of the European Union, Japan, Korea and countries of Latin America,will be forced to close its operations on May 31, 2022.
The reason purely being its inability to procure sulphuric acid and other raw materials at reasonable costs in Tamil Nadu. To keep its operations going, the company even tried to acquire the necessary raw materials from Odisha-based Paradeep Phosphates, but to no avail.
“Getting the necessary raw materials from Paradeep Phosphates proved to be an unviable proposition and hence we are forced to close our operations. Given the high cost of diesel and 3,600 km of up and down journey from Odisha and other associated costs, running the operation was turning out to be a loss-making exercise”, according to Gopal, MD, Amrita Chemicals. “The closure of the Sterlite copper plant destroyed my whole market and I am unable even to fulfill my existing orders. We have to pay heavy penalties for non-delivery and outsource some of the work to his competitors to meet our existing orders, at very high costs.,”he said.