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Odisha govt says no bauxite available to feed Vedanta refinery

Attempts to mine bauxite atop Niyamgiri hills came unstuck as local tribals unanimously trumped the mining plan in a referendum held in 2013

Jayajit Dash  |  Bhubaneswar 

Anil Agarwal
Anil Agarwal

The Odisha government today said it cannot come to the immediate rescue of Vedanta's one million tonne refinery at Lanjigarh that is heading for closure since no bauxite lease was available with its mining PSU Odisha Mining Corporation (OMC) to feed the starving unit.

"The state government had an arrangement with Vedanta to ensure bauxite supplies to the Lanjigarh plant through OMC. But unfortunately, OMC has no running bauxite mine to provide the raw material", said state steel & mines minister Prafulla Mallick.

In the memorandum of understanding (MoU) signed with Vedanta (then Sesa Sterlite), the Odisha government had assured supply of 150 million tonne of bauxite per annum. OMC had formed South West Bauxite Mining Company (Pvt) Ltd, a joint venture (JV) with 26% equity of Sterlite Industries India Ltd in 2009 for supply of bauxite from deposits in Kalahandi and Rayagada districts to feed the alumina refinery. However, attempts to mine bauxite atop the Niyamgiri hills came unstuck as local tribals unanimously trumped the mining plan in a referendum held in 2013.

After the Niyamgiri fiasco, Vedanta has been pleading to the state government for allotment of alternate bauxite supplies to keep its refinery operations afloat. But, the government, was yet to offer any alternative except allotment of three small laterite deposits.

The state government has pushed the Centre to issue mining license in favour of OMC over Karlapat bauxite mine that has already been allocated to the PSU.

Also, it has sought reservation of Sasubohumali bauxite mines for OMC to ensure bauxite supplies to firms like Vedanta.

However, Vedanta feels allocation of mines to OMC will be not provide any immediate succour to the company's starving refinery at Lanjigarh.

"It will take time for OMC to excavate bauxite from its allocated leases and hence would not serve our immediate need of the raw material. To run the refinery at full capacity of one million tonne, we need 3-3.5 million tonne of good quality bauxite every year. In fact, Vedanta has been meeting 40-45% of its bauxite needs through imports from countries like New Guinea", said a senior company official.

On Tuesday, Vedanta said it had initiated process to shut its Lanjigarh refinery, a move that would impact 10,000 people directly dependent on the plant. Vedanta that had invested Rs 4500 crore on the refinery, was bleeding loss of Rs three crore every day as running the plant on externally sourced bauxite turned out to be economically unviable.

First Published: Wed, August 26 2015. 18:22 IST