Vedanta hopes to get over bauxite impasse in 3-4 months

CM assures to allow the company to use its IPP power for aluminium smelter

London-listed Vedanta Resources, the diversified metals and mining major, hopes to get over the impasse on bauxite supplies to its Lanjigarh aluminium refinery in three to four months.

The one million tonne refinery is running at below its rated capacity by sourcing bauxite from states like Andhra Pradesh, Chattisgarh and Jharkhand and also imports from Guinea and other countries.

“The state government has assured us that they are working on 2-3 alternative bauxite mines for our Lanjigarh refinery. They will take up the matter with the central government and have assured that bauxite from these sources will be made available in 3-4 months”, Vedanta Resources chairman Anil Agarwal told media persons after meeting chief minister Naveen Patnaik. Agarwal also called on the state chief secretary G C Pati and Aditya Padhee, additional chief secretary.

It may be noted that the gram sabha had recently given its consent to Vedanta’s bid to expand refinery capacity six fold to six million tonne per annum. The capacity expansion would mean Rs 10,000 crore expenditure to the already invested Rs 52,000 crore over 10 years to build alumina, aluminium and power facilities at Lanjigarh and Jharsuguda, respectively.  The metal major expects to achieve the planned capacity upgrade within a year of getting all approvals.

To feed its Lanjigarh refinery, Vedanta was eyeing Sijimali and Kutrumali deposits across Kalahandi and Rayagada districts over which engineering giant Larsen & Toubro (L&T) had got prospecting license (PL) more than two decades ago.

But L&T did not get a mining lease (ML) for these bauxite mines since it had no end-use project. However, Vedanta had entered into a pact with L&T to source bauxite from the twin mines with combined reserves close to 300 million tonne.

After being denied access to the Niyamgiri bauxite deposits of Odisha Mining Corporation (OMC) following tribal protests, the state government recently allotted three laterite bauxite mines in Koraput district with a combined deposit of three to five million tonne of bauxite in favour of Vedanta, as short-term relief.Today, the Vedanta Group chief also got an assurance from the state government to use power generated from its 2400 Mw coal-fired plant near Jharsuguda to run its smelting facility nearby. The company was unable to use this power for the aluminium smelter as it was not a captive facility and was built as an independent power project.Sesa Sterlite, a Group firm, also has 1200 Mw captive power plant (CPP) at Jharsuguda.

“To run a two million tonne smelter, 3600 Mw power is needed. The government has assured us that we can use full power for smelter operations and all clearances would be given in 15-20 days”, said Agarwal.

Sources said, Vedanta may enter into a tri-partite agreement with the state government and power distribution company, Wesco before being able to use its IPP power for the aluminium smelter. If necessary, the status of the IPP could be changed from IPP to captive power unit, sources said.