Orissa weighing alternative bauxite source for Vedanta

After a unanimous rejection of the proposal to mine bauxite in the Niyamgiri hills by village councils in the Rayagada and Kalahandi districts, the Orissa government is examining the option of providing mineral linkage to Vedanta’s alumina plant through the Sijumali-Kutrumali mines.

If the state government is able to resolve the legal issues around the two mines and expedite the stage I and II forest and environmental clearances, it would be a win-win case. This is because the prospecting lease of the two mines was granted to L&T way back in 1992, but the company could not get a mining lease as its sale-purchase agreement for value-addition in the state — with Alcoa of US and later with Dubal of Dubai — failed to take off.

According to the state government’s policy, value-addition of the mined bauxite has to be done within the state and only the finished product — aluminum in this case — can be exported out of the state.

“We are looking for a way to ensure raw material supply to the plant,” state chief secretary Jugal Kishore Mohapatra told FE. “We have sought legal opinion on the status of the available bauxite mines in the state,” he added, without divulging any further details.

Once the legal and other approvals are in place, the agreement would be akin to what Vedanta currently has with the Orissa Mining Corporation — to source bauxite mined by it from the Niyamgiri hills to feed its 1-million-tonne alumina plant at Lanjigarh.

While the Sijumali mines (located in the Rayagada district have bauxite reserves of around 245 million tonne), the Kutrumali mines in Kalahandi have reserves of around 40 million tonne.

Meanwhile, the state government has also proposed to lease out laterite deposits to Vedanta to source a part of the required raw material.

In the meantime, Vedanta is sourcing bauxite from Gujarat and Chhattisgarh to feed its plant, which is operating at 50% capacity.

Vedanta operates a 0.5-mtpa aluminium plant at Jharsuguda in Orissa, for which it needs 1 mtpa of alumina at Lanjigarh. To make alumina there, it needs 3 mtpa of bauxite.

At 2.5 billion tonne, Orissa sits on one of the largest bauxite reserves. Industry sources say that quality-wise, it is the world’s best.

Vedanta says it has invested around INR 50,000 crore in Orissa, including the aluminium and alumina plants, and the smelter and power plant.