Vedanta to refocus aluminium operations in Odisha

After investing US$7.5 billion in establishing an alumina refinery and an aluminium smelter and associated power facilities in the region, Vedanta Resources plc announced late last week that it is shifting its focus in the state of Odisha.

“For us, the Niyamgiri chapter is closed. We are not pursuing it anymore,” said chief executive officer of Vedanta’s aluminium business Abhijit Pati. “We have decided to realign our operations to run on imported bauxite and alumina.”

Pati went on to explain that the firm would focus on optimizing costs, adding capacity, and enhancing its value-add component. It is also working to reduce the production cost of aluminium by US$400 per metric ton, down from its current cost of production in Odisha, which is US$1,900 per metric ton. As the company has no captive mines in the state, their cost per metric ton of alumina is about US$140 per metric ton higher than other manufacturers in the area, like Hindalco. Vedanta says it intends to make up the difference through increased energy efficiency.

The firm is also planning to double capacity at its Lanjigarh refinery and its Jharsuguda smelter via imported bauxite. Vedanta says it will strive to reduce the fixed cost for producing aluminium in Odisha, which it says is US$450 per metric ton.

Pati also said that it would increase bauxite supply from Gujarat, Jharkhand, Maharashtra and Andhra Pradesh, and to import alumina to fuel the Jharsuguda smelter. He indicated that the cost of importing alumina would be offset by the reduction in fixed costs.

“Initially, we will supply 0.2 mn tonnes of liquid aluminium, which will be scaled up to one mn tonnes in phases. By this we will save on logistics and the cost of melting, which together is expected to give us an advantage of $150 per tonne of aluminium,” explained Pati.