Vedanta may temporarily shut down Odisha refinery

Date of publication: 
22 August 2012

Kolkata/ Bhubaneswar – Rapidly dwindling stock of bauxite at its refinery complex at Lanjigarh in Odisha’s Kalahandi district has forced Vedanta Aluminium Ltd (VAL) to downsize its capacity significantly.

And, with bauxite stock depleting to almost ‘zero level’, the refinery plant is barely able to run intermittent operations for the past two days after operating at 40-50 per cent capacity since August 1 this year.

After being denied access to the bauxite deposits at Niyamgiri Hills by Union Ministry of Environment and Forest (MoEF), VAL wholly depended on bauxite sourced from other states to keep its refinery operation afloat at Lanjigarh.

But supply glitches from have poured cold water over its plans, leaving the company high and dry. With sourcing of bauxite from other states becoming increasingly difficult, VAL may be left with no other option except going for ‘temporary shutdown’ of the plant, says a top official of the company.

“There is no bauxite to talk of. We have zero stock. The company is making all out efforts to source bauxite but things are not working in our favour. One of our major mines in Chhattisgarh which used to supply us 120,000 tonnes of bauxite per month has become non-operational due to expiry of mining lease. Mine operations of another smaller mine in the same state that supplied 60,000-70,000 tonnes per month has been impacted by rains,” said the official.

Of late, the company is unable to get bauxite from Gujarat Mineral Development Corporation (GMDC) as the company had not issued any tender recently. Besides, private miners in Gujarat are preferring to export their material instead of selling it in the domestic market because of better returns, the VAL official informed.

Bauxite mines in neighbouring Jharkhand and Andhra Pradesh were bogged down by regulatory issues and this has hit supplies, he added.

To run the one million tonne per annum (mtpa) refinery plant at full steam, VAL needs 300,000 tonnes of bauxite every month.

He clarified that there was no pressure piled by Vedanta Resources’ shareholders to shut the Odisha refinery as it was bleeding financially.

“There is no such pressure from the shareholders to close the Odisha refinery. Its true we have been running losses by importing bauxite from other states, but we have always strived to keep the refinery running,” he said.

Owing to its total dependence on externally sourced bauxite, VAL has hitherto incurred cumulative losses to the tune of Rs 3,000 crore.

“More than 7,000 people are employed directly or indirectly at the Lanjigarh refinery. We cannot allow the refinery to close, putting the future of so many people at stake. VAL is currently running its 0.5 mtpa smelter plant by importing alumina,” he added.

VAL’s Lanjigarh refinery as well as smelter and captive power plant (CPP) complex at Jharsuguda has seen grounding of investments of Rs 50,000 crore. The company’s smelting facility and CPP engage more than 15,000 people.

VAL had designed its refinery in Odisha keeping in mind the locally available bauxite. The aluminium major had entered into an agreement with state controlled miner Odisha Mining Corporation (OMC) for supply of bauxite.

But attempts to mine bauxite at the ecologically sensitive Niyamgiri hills under OMC’s leasehold in Lanjigarh district were red flagged by the environment ministry that had scrapped the Stage-II forest clearance on August 24, 2010.