From Friday, Vedanta may shut Lanjigarh refinery temporarily

Vedanta Aluminium (VAL) has said it may shut its alumina refinery in Lanjigarh, Odisha, in a day or two. Earlier, the company had said it would shut the refinery from December 5, owing to a shortage of bauxite.

With any immediate supply of bauxite unlikely, the company said it would be compelled to shut the refinery for 10-15 days by Friday.

“Going by our current stock of bauxite, we will not be in a position to run the refinery after a day or two. Then, we have to take a painful decision to shut our refinery plant for 10-15 days. In the past eight to nine days, the refinery’s capacity utilisation has slumped to 30-35 per cent, and it is not advisable to run the plant at this depleted capacity for technical reasons,” a senior company executive told Business Standard.

VAL’s only glimmer of hope — sourcing bauxite from state-run Gujarat Mineral Development Corporation (GMDC) — is also unlikely, as the deal is expected to take time to materialise. "We had bid for GMDC’s tender and have also won the contract for sourcing 90,000 tonnes of bauxite. But supplies are likely to commence only after 10-15 days. Till then, we have to keep the refinery shut,” the official added.

With its refinery plant headed for closure, VAL has decided to shut its captive co-generation power plant, as there wouldn’t be any steam to run it. The company has already intimated the Kalahandi east electrical division of Western Electricity Supply Company about its intention to shut the captive generation plant. It has sought 8-10 Mw of power from the state grid to ensure the power plant and refinery systems run in a smooth manner.

When contacted, VAL said it would make an official comment on the refinery’s temporary shutdown on Friday.

The closure of the refinery would put the livelihood of 6,500 people at stake. Of these, 550 are employed directly, 5,000 indirectly and 1,000 are self-employed, in and around the plant. The company claimed to have spent Rs 150 crore on the development of the area and the local community.

VAL has not been allotted any mining lease in Odisha. It depends on externally-sourced bauxite for its refinery. It had signed a pact with state-controlled miner Odisha Mining Corporation for the supply of bauxite from the Niyamgiri hills. However, attempts to mine bauxite at the ecologically sensitive hills were red-flagged by the environment ministry, which had scrapped stage-II forest clearance for the project on August 24, 2010.

Following the Niyamgiri debacle, VAL had filed 26 applications with the state government, seeking alternative bauxite deposits. However, the state government is yet to take any action on these.

“There is no readily available bauxite we can offer to Vedanta Aluminium. There is no dearth of bauxite deposits in the state; but the mines have to be opened, and these need regulatory approvals. Moreover, the Niyamgiri case is still pending in the Supreme Court and there is nothing the state government can do about it,” state chief secretary B K Patnaik had said recently.