Vedanta arm plans Orissa refinery expansion

The total investment at the Lanjigarh refinery will be around Rs 11,000 crore after the expansion.

The expansion plan comes in the wake of problems the company is facing with regard to securing bauxite linkage for the refinery.

The company has plans to mine bauxite through a joint venture with Orissa Mining Corporation (OMC) from the nearby Niyamgiri hills. However, the mining project has run into rough weather with green activists moving the Supreme Court aganst the adverse impact it would have on the environment around Niyamgiri.

Vedanta has complied with certain conditions laid down in an interim order of the Supreme Court and is awaiting the final verdict of the court over grant of permission to mine bauxite in Niyamgiri.

The Lanjigarh refinery, which started its test run last August, is now operating at half of its installed capacity, incurring a loss of about Rs 1 crore a day since last October, with an annual loss estimated at about Rs 400 crore.

Sources said the firm has lined up the refinery expansion hoping that the apex court will finally allow it to source bauxite from the Niyamgiri hills.

"We plan to increase the capacity of the Lanjigarh refinery to 6 mtpa in phases. But the expansion will be possible only if the company gets the bauxite mine lease in Orissa," said Dr Mukesh Kumar, chief operating officer, VAL.