Vedanta’s Jamkhani coal block expected to help company reduce aluminium production cost

Coal production from Jamkhani coal block is expected to take Vedanta an inch closer to its goal to reduce aluminium production cost to US$ 1,500 per tonne. Vedanta Limited had acquired the Jamkhani coal block with 220 million tonnes deposits at competitive auctions in Odisha.

An increase in domestic coal production will boost power supplies, a critical input in aluminium smelting accounting for around 40 per cent of the metal production cost, and will also help Vedanta reduce imports, resulting in cost savings.

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Srinivasan Venkatakrishnan, chief executive officer (CEO) of Vedanta Limited said: “We have now signed the Coal Mines and Development and Production agreement with the Government of India in respect to the Jamkhani Coal Block in Odisha. Steps are now being taken towards operationalizing this block. This has potential to reduce our power costs by 10 to 15 per cent. With our plans to increase coal linkages through participation in future options, enhancing bauxite sourcing to exploration of new resources, captive alumina capacity ramp-up and other cost reduction initiatives across the value chain, we are inching closer to our target CoP of $1,500 a tonne.”

Jamkhani coal block has a rated capacity of 1 million tonnes per annum. According to the report, Vedanta aims to commence mining at Jamkhani block within a year. The company is now awaited to get the requisite letter from the state authorities. Initially, Vedanta aims to extract 2.6 million tonnes per annum from the block.

The Jamkhani coal mine is Vedanta’s second captive mine after Chotia in Jharkhand. The latter in the December quarter of FY20 had recorded an output of 278,000 tonnes, indicating growth in coal materialisation for Vedanta.

It is to be noted that Vedanta in the aluminium sector has made significant improvement in reducing its cost of production to $1692 per tonne, down 9 per cent quarter-on-year and 18 per cent year-on-year. Improvement in coal performance and ramp-up in alumina output at Lanjigarh refinery could be attributed to the falling cost of Vedanta’s aluminium making.