Industry Info

Alternative bauxite supplies continue to elude Vedanta

Hopes of supplies from Sijimali, Kutrumali mines hits legal roadblock

Vedanta Aluminium Ltd's (VAL) hope to source bauxite from Sijimali and Kutrumali mines in south Odisha's Rayagada and Kalahandi districts has hit a legal roadblock.

Engineering giant L&T had originally obtained prospecting license (PL) over the two deposits. The grant of ML was expected to come to VAL's rescue since the Anil Agarwal controlled firm had picked up 24 per cent stake in L&T promoted Raykal Aluminium. The special purpose vehicle called Raykal Aluminum was formed to implement L&T's one million tonne refinery proposed at Rayagada.

But the Odisha government's counsel in the Supreme Court U U Lalit has advised against issuing ML to L&T. A state government official said the counsel's refusal stems from the fact that L&T had won PL for the twin bauxite deposits way back in 1992 and granting ML at this stage could create legal complications.

Besides, the counsel is understood to have suggested that ML could not be issued to L&T, taking into consideration VAL's one million tonne Lanjigarh refinery as the end-use plant.

Earlier, the state government had sought the views of its advocate general (AG) on the possibility of granting ML to L&T when VAL's refinery was facing a shutdown as bauxite sources dried up. But given the sensitivity of the matter, the AG had urged the government to take the views of its Supreme Court counsel.

L&T had won PL for Sijimali and Kutrumali bauxite mines with total deposit of close to 300 million tonnes, in 1992. But two years later after the expiry of PL, the state government denied ML to L&T since it had no end-use plant.

In 2005, L&T through a joint venture with Dubai Aluminium (Dubal) had proposed Rs 5000 crore alumina refinery at Rayagada. However, the project remained a non-starter.

Seven years later in 2012 when Dubal walked out of the SPV, VAL bought 24 per cent stake in the project. VAL had an option to buy out the entire 100 per cent stake in the SPV valued at Rs 1811 crore.

VAL was forced to go for temporary shutdown of the one million tonne refinery on December 5 last year on bauxite unavailability. Since then, the company has been struggling to obtain the raw material from alternative sources. To operate at full capacity, VAL needed 300,000 tonnes of bauxite every month.

The company had urged the state government to expedite processing of pending applications of state owned Odisha Mining Corporation (OMC), especially those bauxite leases falling under non-forest areas.

The company has filed 26 applications for alternative bauxite mining leases of which 14 are at PL stage and the balance 12 at ML stage. These included Karlapat (south), Sasbahumali, Gandhamardhan and Ghusramali to name a few.

Source: Business Standard