Vedanta's alumina output dips 8% on lower bauxite availability

Aluminium
Alumina production by Vedanta for the quarter ended September 30, 2017 fell eight per cent year-on-year as bauxite availability from its captive mines held by Group company BALCO shrank. 

The total alumina output in July-September quarter was 269,000 tonnes as against 292,000 tonnes achieved in the corresponding period of the last financial year. When compared to the April-June quarter, alumina output at Vedanta's Lanjigarh refinery in south Odisha was down by 11 per cent.

A source at Vedanta attributed the dip in production to logistics constraints. “There are transportation issues. We did not get sufficient rakes to carry bauxite from BALCO mines to our refining unit,” he said. The company official, however, sounded upbeat on meeting the alumina production target for this financial year.  The company looks to close FY17 with an alumina output of 1.8 million tonnes from the Lanjigarh refinery.

Also, the recent spike in spot global alumina prices would not have much implication for Vedanta. “The recent rally in alumina prices is the fall out of some supply shortfall in China. We believe this is a temporary phenomenon and would not hold on for long. Vedanta has long-term contracts with bauxite suppliers in Guinea and Australia and this hedges us against vacillating prices,” he added. 

The refinery located at the foothills of the bauxite laden Niyamgiri mountain range, has a rated capacity of six million tonnes per annum (mtpa). Vedanta has permits to produce four mtpa. But, the refinery was operating at less than half of the approved capacity as local bauxite was unavailable.

Vedanta has been running the refinery by sourcing bauxite from the BALCO mines in Chhattisgarh. It also imports the raw material from New Guinea and Australia.

After Vedanta lost the bid to mine the ecologically fragile Niyamgiri hills, it has been appealing to the Odisha government for arranging local bauxite from alternative sources. Local tribes made up mostly by Dongaria Kondhs, unanimously nixed the mining plan during July-August 2013 in a referendum held as per the Supreme Court's order. Barring a few small laterite mines with traces of bauxite, the state government has not been able to come to the rescue of the starving Lanjigarh refinery.

Though the state controlled company - Odisha Mining Corporation (OMC) has some good quality bauxite deposits in Karlapat, Sasubohumali and Kodingamali leases, mining as not taken off yet due to lack of regulatory clearances.

"We are open to sourcing bauxite from OMC. It could be either a long-term linkage arrangement or buying at e-auctions. Vedanta is also awaiting auctions of bauxite assets in Odisha where we intend to participate," the official said.



Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel