Vedanta's cumulative loss on Odisha refinery crosses INR 4,000 cr

Diversified metals and mining major Vedanta Ltd has incurred a cumulative loss of INR 4299 core (till October end) on its one million tonne Lanjigarh alumina refinery since the beginning of commercial operations in August 2007.

Though Vedanta recently de-rated capacity of the refinery by 50 per cent, it is still bleeding loss of close to INR three crore every day due to non-availability of domestic bauxite.

"Our daily cash loss continues to be in the Rs three crore bracket. De-rating of capacity by 50 per cent is a critical measure taken to safeguard us from widening of the daily loss that is stemming from continued fall in global aluminium prices. Lack of local bauxite and a strong price tag on global bauxite remain the cost drivers", said a Vedanta spokesperson.

Presently, Vedanta is producing 70,000 tonne of alumina every month at its Lanjigarh refinery and this needs 210,000 tonne of bauxite. While the company is sourcing 65 per cent of its bauxite requirement from other states, the rest 35 per cent is met through imports from countries like New Guinea.

Bauxite sourced from other states costs INR 3,500 a tonne compared to Rs 900 per tonne by others from their captive mines. In order to make the outsourced bauxite to meet its quality parameters, Vedanta is importing bauxite at the rate of INR 5,000 per tonne, resulting in foreign exchange loss of INR 360 crore annually. This apart, the sharp fall in aluminium prices has made aluminium operations unviable for Vedanta.

Though Vedanta has an agreement with state-owned Odisha Mining Corporation (OMC) for supply of 150 million tonne of bauxite, getting local bauxite remains a pipe-dream.

"We have requested the state committee for active intervention of the government in ensuring long term bauxite supply of 150 million tonne at terms and conditions agreed upon initially. We also urged that auctioning of other bauxite deposits in the state should be made applicable for end use plants proposing 100 per cent value addition in the state itself", said Abhijit Pati, chief executive officer (aluminium), Vedanta Ltd.

Vedanta Group has pumped in more than INR 50,000 crore investments in Odisha on facilities like Lanjigarh refinery, 2,400 Mw coal-fired plant near Jharsuguda and two aluminium smelters (one being a product specific SEZ) in the vicinity of the power plant. However, the entire investment was now at stake due to raw material uncertainty and market volatility.

But Vedanta is not going for closure of the refinery despite the mounting losses. While it intends to continue production at its Lanjigarh refinery, it expects the state government to come out with swift solutions to the raw material imbroglio in the interest of families dependent on the plant and overall socio-economic development of the region.