Vedanta sees aluminium costs falling below $1,700/t in H2FY26 as Sijimali bauxite mine nears approval

Vedanta Ltd told investors last week that it expects the cash cost of producing primary aluminium to slide beneath USD 1,700 per tonne in the second half of FY 2026, supported by higher captive alumina output from its Lanjigarh refinery and the impending start-up of the Sijimali bauxite mine in Odisha.

“With Train II at Lanjigarh fully ramping and Sijimali contributing up to 1.5 million tonnes of bauxite, we are set for sub-USD 1,700 hot-metal costs,” CFO, Anup Agarwal said on the company’s Q1 earnings call.

Bauxite: Sijimali heads for Q4 start

The Forest Advisory Committee signed off Sijimali’s first-stage clearance (FC-1) on 30 July. Management expects to complete the FC-2 and environmental (EC) approvals “within three to four months,” paving the way for mining to begin by the end of Q4 2026. The pit should supply 1.0–1.5 Mt of ore this year.

Exports from Emirates Global Aluminium’s Guinea unit remain suspended, but the company said the gap has been covered by other contracts. For the full year, Vedanta has already locked in the ~9 Mt of bauxite it needs to feed its alumina refineries:

To get more insights into bauxite, read our report: Global Bauxite and Alumina Industry Outlook 2025

Alumina: Train II lifts captive mix to 65-70 per cent

Lanjigarh produced 584 kt of alumina in Q1 FY26 and remains on track for 3.0–3.1 million tonnes this fiscal year. The full ramp-up of Train II will lift Vedanta’s captive-alumina share from roughly 50 per cent to 65-70 per cent, pushing refinery cash costs below USD 800 per tonne. Together with softer third-party alumina prices, management expects an additional USD 80–100 per tonne savings over the next two quarters.

The plant currently operates at about 3.5 million tonnes per annum. Management’s first milestone is to stabilise output at 5 million tonnes per annum; once that level is reached, an 18-month debottlenecking campaign — focused on upgrading kilns, calciners, material-handling systems and outbound logistics (rail, port and other evacuation links) — will raise nameplate capacity to 6 million tonnes per annum. The company still targets mechanical completion for this second-phase upgrade in the back half of FY27.

Primary aluminium: cost floor and capacity creep

Vedanta’s Q1 hot-metal cash cost fell 12 per cent quarter-on-quarter to USD 1,765 per tonne on cheaper alumina and a higher captive mix. While planned maintenance at the Jharsuguda power plant will curb further gains in Q2, the company reaffirmed its full-year guidance of USD 1,700–1,750 per tonne, aiming for the lower end in H2. Power costs are already “close to USD 500 per tonne,” CFO Anup Agarwal noted.

On the capacity side, the group is installing magnetic compensation loops in potlines at Jharsuguda and BALCO—a technology that boosts current efficiency and metal throughput. The retrofit underpins Vedanta’s plan to lift smelter capacity to 2.8–2.85 million tonnes within the next 18 months. And the target production for FY26 is 2.5-2.6 million tonnes.

Additionally, the company confirmed that the commissioning of the expansion of 435,000 tonnes per annum Balco smelter is targeted in the current quarter.

Note: This article has been issued by SMM and has been published by AL Circle with its original information without any modifications or edits to the core subject/data.