Vedanta eyes bauxite auctions for feeding Lanjigarh refinery

London-listed Vedanta Resources is looking up to auctions of bauxite blocks to clinch long-term raw material security for its alumina refinery at Lanjigarh (Odisha).

Vedanta was feeding the refinery by sourcing bauxite from other states as well as importing from countries like Guinea. The refinery operations had become unviable in the absence of local bauxite sources and Vedanta had idled one stream of the refinery’s operations to trim the ballooning losses. As of now, the Lanjigarh refinery is operating at 0.8 million tonne per annum (mtpa) though it has approvals to run at a capacity of up to four mtpa. Idling one stream of the refinery has helped Vedanta cut its daily losses from INR 3.5-4 crore to INR 2 crore presently.

But since Vedanta has already initiated capacity ramp up of its smelters at Jharsuguda and the Balco unit at Korba (Chhattisgarh), it needed more alumina to cater to the smelters. Hence, it has planned to raise refinery capacity in this fiscal from 0.8 mtpa to 1.5 mtpa.

“Odisha has lined up the Balda bauxite block for auctions which has a reserve of 20 million tonne. Once it is put up for auctions, we will evaluate all options including whether we will bid for it. The state government should reserve this block for an end use plant so that traders and merchant miners disqualify from bidding”, said a company source.

Separately, Vedanta is taking steps to commence mining from three small laterite mines allocated by the Odisha government. Together, these mines have combined deposits of three million tonne of bauxite.

“We are also constantly engaging with the state government for securing local bauxite supplies for our Lanjigarh refinery”, he added.

Vedanta has an arrangement with state run Odisha Mining Corporation (OMC) for supply of 150 million tonne (mt) of bauxite. But with the Union environment ministry red flagging bauxite mining on top of the ecologically fragile Niyamgiri hills after tribals nixed the plan in 2013, getting bauxite has remained a pipedream.

To feed the refinery, Vedanta was sourcing 60-70 per cent of bauxite from domestic sources and importing the remaining 30 per cent. Through cost optimisation and other measures, Vedanta has managed to cut its cost of alumina production from $330 per tonne to $260-270 a tonne.

The company's aluminium production this fiscal is pegged at 1.5 mt, up from 0.93 mt in 2015-16. For producing 1.5 mt of aluminium, Vedanta needs three mt of alumina. Of this 1.5 mt would come from the Lanjigarh and the balance from imports.

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