Vedanta undeterred by bauxite mining challenges

Vedanta Aluminium, one of India’s three leading primary aluminium companies, is focused on getting its ambitious aluminium expansion plans executed successfully despite multiple bauxite mining challenges strewing its path. It is said to be banking heavily on its high smelting capacity and the “proven acumen to buy auction coal at best possible prices at all times” to scale production at its Lanjigarh alumina refinery. Industry sources have it that Vedanta is also planning bigger investments in aluminium here in India.

Vedanta unlike its two peers Nalco and Hindalco lacks captive bauxite mine. It has to rely on bauxite procured from other states within the country and from Australia and Ghana. Unlike China it does not buy Vietnamese bauxite also as it contains a high percentage of reactive silica and in India there is no facility to remove the contaminant from the ore. This dependence on externally sourced bauxite increases Vedanta’s aluminium production cost by around $170 a tonne in comparison with Nalco and Hindalco.

Odisha Mining Corporation (OMC) has also failed in its attempts to ensure the uninterrupted supply of bauxite to the company several times in the past.

Nevertheless, the aluminium giant remains undaunted with the setbacks. Some time ago, Vedanta Chairman Anil Agarwal had said that India “will continue to have everything going in its favour to multiply its present primary aluminium capacity of 4.1 million tonnes several fold in the coming years.” Despite doubtful criticisms from many quarters of the industry and analysts, Mr Agarwal seems to be holding firm to his view.

He said recently, “Going ahead, everything will move to aluminium. From automobile, construction, aerospace and railway, aluminium will be the preferred metal to use.” And this notion makes him stay focused on his aluminium investment plans.

{googleAdsense}

Vedanta is doubly hopeful that some relief will come its way when OMC starts selling bauxite by October this year from a newly-opened mine at Kodingamali in the Koraput district of Odisha with an estimated reserve of 80 million tonnes.

However, in that case also Vedanta may have to compete with traders willing to participate in tenders for any bauxite sale at the site; but the company’s possibility of ousting any competition there remains considerably high.