L&T's Odisha alumina refinery project in limbo

L&T with Dubai Aluminium had proposed to invest Rs 30,000 cr on a 3 MTPA alumina refinery, 1.5 MTPA smelter project and a CPP

Engineering & construction giant L&T on Tuesday said its integrated alumina refinery and smelter project in the state is under suspension.

L&T through a joint venture partnership with Dubai Aluminium Ltd (Dubal) in 2005 had proposed to invest Rs 30,000 crore on a three million tonne per annum (mtpa) alumina refinery, 1.5 mtpa smelter project and a captive power plant (CPP) at an investment of Rs 30,000 crore.

The refinery project was to be established in Rayagada district on about 4,000 acres of land. The smelter complex with capacity of 1.5 mtpa was to come up near Sambalpur.

“Our integrated alumina refinery and smelter project proposed in Odisha is suspended and stopped. I had come to meet him (Odisha chief minister Naveen Patnaik) for this project,” L&T chairman A M Naik said.

Asked on the problems faced by the project, he said “There are no problems. They (the state government) are processing it. The chief minister has assured me that he will look into it seriously.”

Naik evaded direct reply to whether L&T would supply bauxite to Vedanta from two mines- Kutrumali and Sijimali where it has prospecting license and was awaiting grant of mining lease (ML) from the state government. “It is an integrated project where we are also investing by way of CPP at the project site,” he said.

On the possibility of grant of ML by Odisha government, he said, “I think the state government will look into it very objectively.”

L&T had won PL for Sijimali and Kutrumali bauxite mines in south Odisha's Rayagada and Kalahandi districts with total deposit of close to 300 million tonnes, in 1992. But two years later after the expiry of PL, the state government denied ML to L&T since it had no end-use plant.

The state government is now considering possibility of granting ML to L&T these mines. ML for L&T was to come to Vedanta Aluminium Ltd (VAL’s) rescue since it had picked up Dubal’s 24 per cent stake in L&T promoted Raykal Aluminium which was formed to implement the engineering major’s refinery project.

The state steel & mines department had sought the views of its Advocate General on the matter. On the contrary, VAL which was running its one mtpa alumina refinery at Lanjigarh entirely on externally sourced bauxite was forced to go for temporary shutdown of the refinery on December 5 last year on bauxite unavailability. Since then, the company has been struggling to obtain the raw material from alternative sources. To operate at full capacity, VAL needed 300,000 tonnes of bauxite every month.