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Shutdown of its one-mt alumina refinery at Lanjigarh caused by non-availability of bauxite, surprisingly of all places in Odisha where it is found in abundance, the major part of India’s three billion tonnes of the mineral and in spite of official commitment to make available the feedstock either by way of according captive mines linkages or by arranging supplies from standalone mines, is an embarrassment for the Odisha government. Chief Minister Naveen Patnaik saw right from the start of his first term in 2000 that Odisha would develop industrially if only it would harness mineral resources encompassing coal, iron ore and bauxite for local value addition. What he did not bargain for then were the problems to be encountered in land acquisition for hosting major projects like the one proposed by South Korean Posco and securing environmental and forest clearances for mines opening as happened with Niyamgiri hills wherefrom the Lanjigarh refinery was to have sourced bauxite.
Instead of becoming a source of 80 mt of bauxite over a period of time, Niyamgiri, thanks to reasons well known, became a global cause celebre undoing much of Odisha’s pro-industry image building exercise. Incidentally, the state has a commitment to supply 150 mt of bauxite to Lanjigarh refinery under a memorandum of understanding (MoU) signed with Vedanta as far back as in October 2004. That Posco is yet to get all the land it needs to accommodate the proposed 12-mt steel plant though eight years have passed since MoU signing, does not show Odisha in good light. Posco is not, however, stuck with the investment. Finex technology allowing steel making using low-cost raw materials like iron ore fines and non-coking coal, dispensing with coke making and sintering that Posco is to employ for the Odisha mill, will give a new dimension to the Indian steel industry. All that is still on paper. In the case of Vedanta, “We have invested heavily, by far the single largest for the state, to build a one-mt alumina refinery, aluminium smelting capacity of 1.75 mt at Jharsuguda, among the world’s biggest single site smelters and also coal fired power capacity of 3,600 Mw. But in the absence of bauxite supply by Odisha Mining Corporation (OMC) to which it is committed, the refinery is staying shut,” says Roongta. Non supply of alumina from Lanjigarh refinery has, in turn, badly upset Vedanta’s downstream smelter operations.
What options are left for the veteran of many battles, Roongta, to rescue Lanjigarh refinery from the quagmire? Vedanta ran the refinery at stepped down capacity with bauxite sourced from outside Odisha. High transportation cost and logistical issues made the operation unviable. The Supreme Court is to give its verdict on a petition challenging cancellation of mining rights at Niyamgiri. In case Vedanta gets access to alternative deposits to which it is entitled, the mine opening, after going through all the rituals, is a long gestation proposition. “It goes against the principle of equity that the refinery and also the smelter should be left in limbo in the meantime,” says Roongta. Much relief will come Vedanta’s way in the interregnum (till OMC organises normal supply of bauxite), if it could prevail upon National Aluminium Company (Nalco) to sell alumina to it instead of exporting it. In the past five years, Nalco’s alumina exports ranged from a low of 639,855 tonnes to a high of 859,943 tonnes. Vedanta has more than once made offers to Nalco to buy its surplus alumina paying a reasonable premium over the price at which the intermediate chemical is sold in the world market.
“If Nalco decides to part with alumina in our favour instead of export, it will be a win-win situation for us both. While Nalco gets a premium over the export sale price, our smelter can be run to better capacity. Let this be not lost on us that both have manufacturing bases in Odisha,” says Roongta. One can only guess as to what is stopping Nalco from selling alumina to another metal producer in the same state. Nalco and Hindustan Copper are under the same mines ministry. If Hindustan Copper could sell intermediate product metal in concentrate to Hindalco and Sterlite smelters, then what stops Nalco from giving alumina to Vedanta?
