Vedanta’s alumina cost falls to a two-year low on increased coal and bauxite supplies

Improved availability of coal from linked mines and robust output of around 1 million tonnes per annum from Vedanta’s captive Chotia block has helped the company achieve cost competitiveness in the manufacture of alumina.

According to a report, Vedanta’s alumina cost at Odisha’s Lanjigarh refinery fell to a two-year low of $284 per tonne by the end of June 2019, down 17 per cent year-on-year. Increased production of alumina was one of the primary reasons, which was at the highest point ever, showing a spike of 37 per cent Y-o-Y.

Materialisation of linked coal improved from 66 per cent in FY2019 to 72 per cent by the end of Q1 FY20.

Higher local bauxite sourcing also aided Vedanta’s efforts to trim the production cost of alumina. Under a long-term linkage arrangement with the Odisha Mining Corporation, Vedanta sources 70 per cent of the bauxite extracted from Kodingamali mine and feeds it to its Lanjigarh alumina refinery.

At present, Vedanta is working on the ramp-up of the refinery, which will expand the capacity to 2.7 million tonnes per annum and then scaling it up to 4 million tonnes per annum before the final peak rated capacity of 6 million tonnes per annum.  This project is expected to cost Vedanta INR 6,400 crore.

Apart from increasing local bauxite sourcing, Anil Agarwal-led Vedanta is enhancing its overseas supplies as well, signing in an agreement with EGA for importing 4 million tonnes of bauxite each year.

Besides, Vedanta aims to bid for the upcoming bauxite blocks to be opened up for online auctions in Chhattisgarh, Jharkhand, and Odisha for achieving long-term bauxite security.