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About a year after buying Dubai Aluminium Company (Dubal)’s 24.5 per cent stake in Larsen & Toubro’s (L&T’s) Raykal Aluminium for Rs 200.7 crore, Vedanta Aluminium Limited (VAL)’s bauxite woes don’t seem to end. The fact that Raykal is yet to receive a mining licence is holding up VAL’s acquisition of additional stake in Raykal.
In December 2012, VAL had shut its one-million-tonne alumina refinery, owing to the non-availability of bauxite. To feed its aluminium smelter, the company has been relying on alumina bought from the open market, as well as imports.
In February 2012, VAL had bought Dubal’s stake in Raykal Aluminium. According to the deal, VAL would continue to increase its stake to up to 100 per cent for Rs 1,811 crore, as and when L&T met certain targets. These targets primarily related to securing mining licences to ensure the company could feed the bauxite from Raykal’s mines to Vedanta’s Lanjigarh alumina refinery. Raykal’s prospective licences have expired, owing to delays in starting the project. According to the deal with VAL, renewal of the licences was L&T’s responsibility.
Earlier this month, L&T Chairman A M Naik had said the project continued to be in suspension.
The two Raykal Aluminium mines are estimated to hold about 300 million tonnes (mt) of bauxite. VAL wants to expand the refinery’s capacity to five mt to ensure Raykal’s bauxite reserves meet its needs for at least 60 years.
Under the agreement, Raykal had proposed to set up a three-mt alumina refinery and a 1.5-mt-a-year aluminium smelter.
Last week, on the sidelines of an industry conference in Mumbai, VAL Managing Director S K Roongta had said the Raykal deal was ongoing. However, he had declined to give a timeline by when the necessary approvals would be secured. Raykal Aluminium, earlier a joint venture between L&T and Dubal, has prospective licences for bauxite mines in Odisha since 1993. Dubal’s exit was attributed to the project’s slow progress.
