Nalco to consider allowing Vedanta to participate in its alumina tenders

India's two leading aluminium producers, National Aluminium Company Limited (NALCO) and Vedanta, finally seem to be collaborating with each other to sort out alumina sourcing related issues that the latter has been facing since long. The central government has asked the Navaratna PSU to consider selling alumina, which it otherwise exports, to Vedanta.

The metal and mining giant's past attempts to participate in Nalco's tenders were earlier thwarted several times by the Nalco unions. It is perceived that the current softening on the stand came after Mines Minister Piyush Goyal expressed his shock at Nalco's strategy to rather export alumina than allow for its conversion within the country, during his visit to Bhubaneshwar earlier this month. It is learnt from reliable sources that Nalco is now considering allowing Vedanta to participate in its alumina tenders.


Both Nalco and Vedanta have alumina refineries and aluminium smelters in Odisha; Nalco also owns captive bauxite mines in the state. Vedanta, on the other hand, has been facing severe bauxite scarcity for which it had also started with the process of gradual closure of its Lanjigarh refinery. The company was denied participation in Nalco’s tenders even when the latter’s refinery, denied bauxite from the controversial Niyamgiri deposit, faced a possible shutdown a few years ago.

Mr. Piyush Goyal who was attending the ‘Make in Odisha’ conclave in Bhubaneshwar earlier this month said that it was rather disheartening to see Nalco not allowing its surplus alumina to be used for value-addition within the country and putting up with “bullying by vested interests.” The company, he further said, even after being in the business for so many years with captive bauxite mines, produced only half the metal that some of its private sector competitors were producing. Nalco produces 22.7 lakh tonne of alumina; of this it consumes only 9 lakh tonne to make 4.6 lakh tonnes of aluminium at its smelter in Angul, and sells the balance amount to international buyers.

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If Nalco finally decides to come forward to help Vedanta with a sustained alumina supply solution, the latter's Jharsuguda smelter capacity ramp-up plan will get a significant boost. The aluminium maker recently announced it would invest INR 15,000 -20,000 crore to increase output at its Jharsuguda smelter to 2mt (or 20 lakh tonnes) over the next three years. With aluminium prices stabilizing (improvement predicted for 2017), the development would make its smelting business worth betting on.