VAL seeks govt intervention to buy Nalco alumina

VAL wants state to convince Nalso to sell its surplus alumina at export prices

After a failed bid to buy surplus alumina from National Aluminium Company (Nalco) for its aluminium smelter at Jharsuguda, Vedanta Aluminium Ltd (VAL) has sought the intervention of the Odisha government on the matter.

VAL wants the state government to convince Nalco to sell its surplus alumina at export prices. The Lanjigarh alumina refinery of VAL is running at a depleted capacity of 30-40 per cent on bauxite sourced from states like Gujarat, Chhattisgarh and Jharkhand and this is hurting alumina availability for its smelter plant.

“Presently, Nalco is exporting surplus alumina to the tune of over one million tonne per year. The diversion of this surplus alumina for VAL’s alumina smelter will generate extra revenue to Nalco of around Rs 200 crore annually over and above their export realisation and thus will help in improving their financial balance sheet. In view of the above, we earnestly request you to impress upon Nalco to allow participation of smelter companies located in Odisha which would be treated as deemed exports for Nalco in their alumina tenders so that the same can be utilised for increasing revenues for the exchequer, ensuring value addition and also generation of employment opportunities,” S K Roongta, managing director, VAL wrote in a letter to the Odisha chief secretary.

The state government has sought the comments of Nalco’s chairman and managing director Ansuman Das on VAL’s suggestion.

VAL has two aluminium smelters at Jharsuguda. First smelter has metal production capacity of 0.5 million tonne per annum (mtpa). It is attached to a 1,215 Mw captive power plant and downstream facilities like wire rod and billets units. This complex is in operation and is meeting its alumina requirement through imports.

The other smelting facility of 1.2 mtpa capacity has been installed as an SEZ (Special Economic Zone) unit. This plant is yet to be commissioned due to non-availability of alumina.

The overall performance of VAL’s smelter was impaired when the Lanjigarh alumina refinery was shut down between December 5, 2012 and July 11, 2013, as bauxite sources dried up.

Earlier, Nalco had turned down VAL’s request to allow it to participate in the tendering process for sale of surplus alumina. VAL had even offered a premium of 7-10 per cent over Nalco’s export price of alumina, but to no avail.

Referring to the state government’s resolution seeking reservation of at least 50 per cent of mined out iron ore for state based industries, VAL has sought similar reservation of alumina for the local units.

As per VAL’s estimates, Nalco could save up to $25 (or Rs 1,650) a tonne towards alumina transportation cost from its refining complex at Damanjodi to Visakhapatnam port. The savings would accrue from railway freight, port handling charges, operations & maintenance and port loading and unloading charges.