Vedanta’s loss on Odisha refinery crosses Rs 4,000 cr

Diversified metals and mining major Vedanta Ltd has incurred a cumulative loss of Rs 4,299 core on its 1 million tonne Lanjigarh alumina refinery since the beginning of commercial operations in August 2007.

Though Vedanta recently de-rated the capacity of the refinery by 50 per cent, it is still losing close to Rs 3 crore every day due to non-availability of domestic bauxite.

“Our daily cash loss continues to be in the Rs 3 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 the 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.

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

Bauxite sourced from other states costs Rs 3,500 a tonne compared to Rs 900 per tonne from captive mines. In order to meet its quality parameters, Vedanta is importing bauxite at the rate of Rs  5,000 per tonne, resulting in a foreign exchange loss of Rs 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 for supply of 150 million tonnes of bauxite, getting local bauxite remains a pipe-dream.

“We have requested active intervention of the government in ensuring long-term bauxite supply of 150 million tonnes at agreed upon terms. 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.

The Vedanta Group has pumped in more than Rs 50,000 crore investment in Odisha on facilities like the Lanjigarh refinery, a 2400 Mw coal-fired plant near Jharsuguda and two aluminium smelters in the vicinity of the power plant. The entire investment is now at stake due to raw material uncertainty and market volatility.

While it intends to continue production at its Lanjigarh refinery, Vedanta expects the state government to come out with a solution to the raw material imbroglio in the interest of families dependent on the plant and the overall socio-economic development of the region.