Diversified metals and mining conglomerate Vedanta Ltd has seen its alumina making cost falling by 17 per cent year-on-year (y-o-y) in Q1 of this fiscal to $284 per tonne.
This is the most competitive cost in alumina achieved by Vedanta at its Lanjigarh refinery in Odisha in the last two years. In FY19, Vedanta’s average alumina production cost stood at $322 per tonne.
Enhanced local bauxite sourcing from the state owned Odisha Mining Corporation (OMC) contributed to pulling down costs for alumina making. OMC has entered into a long-term supply arrangement with Vedanta Ltd to provide bauxite. Under the arrangement, 70 per cent of the bauxite mined by OMC from its Kodingamali mine is to be transported to Vedanta’s Lanjigarh refinery. Vedanta is also free to participate in bauxite auctions hosted by OMC twice a year along with other aluminium producers.
Alumina production at the Lanjigarh production moved up by a record 37 per cent in April-June quarter of this fiscal to 0.44 million tonnes. In the last fiscal year, Vedanta’s alumina output had spiked by 24 per cent to 1.5 million tonnes (mt). The company has announced a staggered ramp-up plan for the Lanjigarh refinery. The first phase of capacity expansion will see the refinery upgraded to 2.7 mt per annum before the scale up to 6 mt.
In its investor presentation for Q1, Vedanta said it was making efforts to significantly increase mining output. That apart, the metals sector titan is also keen on exploration of new resources under the new National Mineral Policy unveiled by the Union government. Vedanta is investing Rs 6,483 crore on the refinery ramp-up. The refinery scale up is expected to decrease Vedanta's dependence on imported alumina and thus, cut its aluminium making costs.
Further, to stave off vagaries of fluctuating input costs, Vedanta is aiming at upstream integration. It has proposed to install a caustic soda production unit at Dhamra with an estimated investment of Rs 6,500 crore.