Odisha likely to fail March 2017 deadline for arranging bauxite supplies for Vedanta

The state government of Odisha had taken up the issue of working out local bauxite supplies for Vedanta’s loss-making alumina refinery at Lanjigarh where it had left in 2013. The state-run mining company Odisha Mining Corporation (OMC) had renewed attempts to start bauxite mining operations in the nearby regions, but their efforts are unlikely meet success as possibilities of them missing the March 2017 seems to be rather too high.

This year August, when Vedanta Group chairman Anil Agarwal visited Odisha, the state government had committed to arrange bauxite from any of the mines held by OMC. The state mines minister Prafulla Mallick had also said bauxite can be arranged from OMC's Kodingamali mines. But in the wake of the present state of affairs it seems they might not be able to make any headway.

"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.



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 posting losses in consecutive quarters after they lost the battle to mine bauxite at the top of Niyamgiri hills to local tribes. The mining giant was kind of forced to run the Lanjigarh alumina refinery at only one mtpa per annum capacity even when it had the capacity to run at four million tonnes per annum. It has been waiting for the bauxite procurement issue to get resolved before it could scale up operations at the facility. But its efforts to source the ore locally has come unstuck so far, widening its losses and raising a question on the long-term viability of the Lanjigarh refinery project.

{googleAdsense}

"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.

Vedanta was reportedly eyeing 1.5 mtpa alumina output in 2016-17 fiscal and to attain that it need assured availability of approximately three mt of bauxite. Vedanta has been sourcing almost 30 per cent of its bauxite from abroad. The balance requirement is met through bauxite supplies from states like Andhra Pradesh, Chhattisgarh and Gujarat.