Odisha may miss March 2017 deadline for bauxite supply

21 November 2016

The Odisha government is unlikely to keep its commitment to work out local bauxite supplies for Vedanta’s alumina refinery at Lanjigarh (Odisha) by March 2017.

During Vedanta Group chairman Anil Agarwal’s last visit to Odisha in August this year, the state government had agreed to break the deadlock in bauxite supplies, committing to arrange bauxite from any of the mines held by state-run Odisha Mining Corporation (OMC).

Before Agarwal’s Odisha visit, the state mines minister Prafulla Mallick had said bauxite can be arranged from OMC’s Kodingamali mines.

“There are a handful of bauxite mines under OMC’s leasehold. But, sourcing bauxite by March 2017 seems improbable. No mine owned by OMC is in a position to start production. There are a couple of mines that lack regulatory clearances. Also, one of the mines is unexplored”, said a senior government official.

Apart from Kodingamali, two key deposits- Karlapat and Sasubohumali leases have been reserved in OMC’s favour.

After losing the battle to mine bauxite atop the ecologically fragile Niyamgiri hills to local tribes, Vedanta was in a quandary. Despite having permits to run the Lanjigarh refinery at four million tonne per annum (mtpa), Vedanta was barely operating it at one mtpa capacity. The company intended to scale up capacity upon availability of local bauxite sources.

Vedanta has been pleading for local bauxite supplies to the state government. It has pointed to the availability of six to seven good quality bauxite mines in the periphery of its refining unit. But its efforts to source the raw material locally has come unstuck so far, widening its losses and raising a question on the long-term viability of the Lanjigarh refinery project.

“We are still pinning our hopes on getting bauxite from local sources. The Kodingamali mines is one of the options and if procedures are expedited, mining can begin soon. Running the refinery on imported bauxite is not a workable option in the long run given the current trend of hardening of commodity prices. Our aim is to secure local bauxite as we are increasingly looking to trim cost of operations”, said a Vedanta source.

This fiscal, Vedanta was eyeing 1.5 mtpa of alumina output and this needed approximately three mt of bauxite. Vedanta was sourcing nearly 30% of its bauxite requirement from abroad. The balance requirement was met through supplies from states like Gujarat, Andhra Pradesh, and Chhattisgarh.

Source – BS