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Vedanta crisis: Odisha to nudge Nalco, Hindalco for interim bauxite supplies

state govt calls both firms for meeting next Friday; Vedanta starts to shut down one mn tonne Lanjigarh refinery

Jayajit Dash  |  Bhubaneswar 

A bird flies by the Vedanta office building in Mumbai
A bird flies by the Vedanta office building in Mumbai

Waking up to acute raw material crisis faced by Vedanta to run its Lanjigarh alumina refinery, the state government has decided to push aluminium producers like National Aluminium Company (Nalco) and Aditya Birla Group promoted Hindalco Industries to make arrangements for interim bauxite supplies.

"The state government has called both Nalco and Hindalco for a meeting next Friday. We will discuss the possibilities of bauxite supplies to Vedanta refinery by the two aluminium manufacturers. Since bauxite mining by state owned Odisha Mining Corporation (OMC) would take two to three years to commence, we are looking at options for immediate supplies to the Vedanta unit", said a senior government official.

ALSO READ: Vedanta to shut Lanjigarh plant on high production cost ALSO READ: Odisha govt says no bauxite available to feed Vedanta refinery ALSO READ: Vedanta land losers urge CM to arrange bauxite for refinery

Vedanta has already kicked off the exercise to shut down its one million tonne Lanjigarh refinery. The refinery project was incurring loss of Rs three crore every day as the entire bauxite needed for the plant was procured from external sources. The refinery banked completely on external bauxite supplies from states like Andhra Pradesh and Chhattisgarh as well as imports from New Guinea to run its operations.

Abhijit Pati, chief operating officer (aluminium), Vedanta Ltd today called on Odisha chief secretary G C Pati, apprising him of the circumstances that have compelled the company to go for the refinery's shutdown.

"The state government is serious to our crisis.

The chief secretary has assured me that different possibilities would be explored to arrange bauxite for the refinery", said Pati.

Ever since local tribals nixed plan to mine bauxite atop the ecologically fragile Niyamgiri hills in 2013, Vedanta has been pleading to the state government to make arrangements for alternative bauxite supplies. 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 lease (ML) 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, since starting mining from these leases is bound to be time consuming, no immediate option was ready to rescue Vedanta's starving refinery.

To run the refinery at full capacity of one million tonne, Vedanta needs 3-3.5 million tonne of good quality bauxite every year. Vedanta has invested Rs 4,500 crore on the refinery. Closure of the refinery is slated to hit livelihoods of 10,000 people directly or indirectly dependent on the plant.

First Published: Mon, August 31 2015. 17:44 IST