Vedanta looking at price hike option to tide over crisis

The company has already cut capacity of the unit and was looking at an array of solutions to sustain its operations amid plunging aluminium prices

London based diversified metals and mining major Vedanta Resources today ruled out any rethink on its planned shutdown of the Lanjigarh refinery in Odisha.

Vedanta has already cut capacity of the unit and was looking at an array of solutions to sustain its operations amid plunging aluminium prices, a top company official said here.

"There is no cooling period for the (Lanjigarh) refinery. Steps have been initiated for its closure. We are operating in a condition of business crisis where we are losing cash flow. There are several solutions where we can work on. We can run the plant as efficiently as we can. We can focus on creating value added materials so that we can increase prices", said Tom Albanese, chief executive officer, Vedanta Resources.

Albanese rued that despite having a world class refinery and smelter (in Odisha), Vedanta had no access to bauxite.

"In the past six months, there has been a dramatic decline in the prices of aluminium. We are not going to find the aluminium market bailing us out. Our own actions and the actions of the state government can help us find a solution", he said.

Albanese called on the chief minister Naveen Patnaik to thrash out a solution to the refinery's crisis.

"We had a good discussion on the range of possible solutions. We believe that the chief minister recognises the urgency of finding a solution during this very difficult market", he added.

Alabanese said, he did not hope for a very rapid solution, citing a series of regulatory processes both at the state and federal level.

Striking a note of optimism, Abhijit Pati, chief executive officer (aluminium), Vedanta Ltd said, "I think the state government is now serious as far as making available bauxite to our refinery is concerned. We strongly believe that some intermediate solution can be worked out."

Pati, however, said, the falling aluminium market had prompted the company to cut refinery capacity.

"We were running it (one million tonne refinery) at 100% capacity. But we have decided to gradually de-rate the capacity to survive in this market", said he.

Vedanta's aluminium smelter at Jharsuguda was also running at a depleted capacity of 30% at 0.5 milion tonne per annum (mtpa) of its rated capacity of 1.75 mtpa.

Pati said Vedanta has been struggling for 10 years in the state because of bauxite crisis. "But the way we have got a positive assurance from the state today, obviously taking the struggle for one more year is not a big job."

Vedanta has invested Rs 4,500 crore on the Lanjigarh refinery. Its closure is bound to impact 10,000 people who are directly or indirectly dependent on the unit for their livelihoods.