Vedanta Aluminium faces $10/tonne cost rise after Odisha HC ruling: CLSA

CLSA expects the Odisha High Court’s dismissal of Vedanta Aluminium Metal’s bauxite petition to have a muted medium-term impact, despite a potential one-time liability and higher aluminium production costs.

The Odisha High Court dismissed Vedanta Aluminium’s petition seeking bauxite supplies from Odisha Mining Corporation (OMC) at the historical rate of INR 1,000 (USD 10.38) per tonne. CLSA said the order could result in a one-time financial impact of up to USD 290 million, including interest, while also increasing the company’s aluminium production costs.

The brokerage estimated OMC’s claim for historical dues at around INR 2,500 crore (USD 59.50 million) before tax, excluding interest. Including interest, the one-time impact could reach USD 290 million, equivalent to around 2.8 per cent of Vedanta Aluminium’s market capitalisation. The post-tax impact could be around USD 195 million, or 1.2 per cent of market capitalisation, according to CLSA.

Vedanta Aluminium is reviewing the judgement and evaluating its next steps, including potential legal options.

Vedanta Aluminium faces higher bauxite costs

CLSA estimated a near-term increase of around USD 10 per tonne in aluminium production costs from first-quarter FY27 levels.

Vedanta Aluminium produced around 2.9 million tonnes of alumina in FY26, with 25 per cent of its bauxite sourced from MC, another 25 per cent from other domestic sources and the remaining 50 per cent imported, largely from Guinea, according to the brokerage.

Since April 2026, the company has been booking OMC bauxite at INR 3,000 (USD 31.15) per tonne, compared with the historical contract price of INR 1,000 (USD 10.38) per tonne and a market price of around INR 3,800 (USD 39.45) per tonne.

Explore the production, demand and consumption forecasts of bauxite and alumina in our report: "Global Bauxite & Alumina Market Forecast to 2036: Supply–Demand, Trade Flows & Price Outlook"

OMC, Sijimali mine could offset cost pressure

CLSA said the medium-term impact could be moderated by higher bauxite sourcing from OMC and the commissioning of Vedanta Aluminium’s captive Sijimali bauxite mine.

OMC is close to securing approvals to increase its bauxite production capacity to 6 million tonnes per annum (MTPA), according to the brokerage. CLSA said Vedanta Aluminium’s Lanjigarh refinery could potentially source more bauxite from OMC, improving its bauxite mix and alumina production.

Even at the revised price, OMC’s bauxite is around USD 10 per tonne cheaper than alternative domestic sources and USD 20-USD 30 per tonne cheaper than imports on a landed basis, CLSA said.

The brokerage also noted that Vedanta Aluminium has received consent to operate for its Sijimali bauxite mine. Once commissioned, the captive mine could help reduce the company’s bauxite costs.

Despite the potential financial impact from the court order, CLSA maintained its ‘Outperform’ rating on Vedanta Aluminium and a 12-month target price of INR 540 (USD 5.61). It said any correction in the stock driven by the court order could provide an opportunity to accumulate.

Vedanta Aluminium shares rose 0.21 per cent to INR 403.70 (USD 4.19) in Monday’s trade and were down 8 per cent over the previous month.

Looking for unwrought aluminium business opportunities? Explore potential leads of primary aluminium on AL Biz.