Diversified metals and mining conglomerate Vedanta Ltd is betting on the Jamkhani block in Odisha to enhance its coal security.
Vedanta was recently declared the successful bidder for Odisha's Jamkhani coal block located in Sundargarh district. The company aims to commence mining from this coal block within a year of getting the requisite letter from the state authorities.
“On the power side, you would have noticed that Vedanta has emerged as a successful bidder for the Jamkhani coal block in Odisha. This along with our Chotia mine will improve our coal security for this business”, S Venkatakrishnan, chief executive officer, Vedanta Ltd said at the company's recent earnings conference call.
The Jamkhani coal block has geological reserves of 222 million tonnes (mt) of which mineable reserves are 14 mt. Initially, Vedanta plans to extract 2.6 mt each year which may be ramped up later.
“We would expect that after the date of getting the letter, it should be about a year within which we should be able to start since it is mostly open cast mining. At 2.6 (mt), it should give us security of about 20 per cent. However, there could be a potential upside on the amount which we can mine per year. Depending that it can even go higher than 30 per cent”, said Ajay Kapur, chief executive officer of Vedanta's aluminium & power business at the same conference call.
The Jamkhani coal block is Vedanta's second captive one after Chotia in Jharkhand that has a rated capacity of one million tonne per annum (mtpa). The Chotia block is operating at almost its full rated capacity.
Last month, Vedanta Ltd had emerged as the highest bidder for Jamkhani block in the government's 10th tranche of coal block auction for captive use. The conduct of coal auctions is pat of the government's initiative to attract private sector's participation.
Since the Jamkhani coal reserve is located close to Vedanta's aluminium smelting units at Jharsuguda- a standalone smelter and a Special Economic Zone (SEZ), it is expected to help the company achieve cost competitiveness in metal production. Vedanta is eyeing aluminium production cost of $1500 per tonne in the near term.