Anil Agarwal’s Vedanta Resources, battling a fall in global aluminium prices, has asked employees at its alumina refinery in Odisha to brace for an imminent shut down.
“We have taken a decision to shut the plant — when (it will be done) remains to be decided,” Karun Kant Dave, chief operating officer at Lanjingarh Alumina Refinery in Kalahandi district, told ET.
Dave on Tuesday addressed about 1,000 employees of the 1-mt refinery, telling them to prepare for the worst.
He told ET that the plant was installed on the understanding that the state government would supply bauxite, but it was running on bauxite sourced from elsewhere. “In the today’s context of the commodity meltdown, it impossible to continue,” Dave said.
In a release, the company said the plant was operating at a daily loss of Rs 3 crore already.
The fast falling rates of aluminium on the London Metal Exchange and lack of captive bauxite have already forced Vedanta to shut its aluminium rolling business at Korba.
The company had at that time hinted at the possibility of shutting its refinery in Odisha, as it also pleaded with the central government to impose duty restrictions on cheap aluminium imports.
Back in December 2012, after it ran into trouble for preempting green clearances, Vedanta had shut the Kalahandi refinery for seven months. When it resumed operations, it ran the alumina refinery with bauxite from Gujarat, Maharashtra and imports from New Guinea.
What has hurt Vedanta the most is not having a supply of bauxite.
The company ran into trouble as its plans to source bauxite through a joint venture with state-owned Orissa Mining Corporation was fiercely resisted by Dongariah and Jharnia Kondhs, people from the “primitive” tribes living on the Niyamgiri mountain, where the 72 mt deposit sits.
Their campaign, supported by global environmental NGOs, ended with the previous UPA government at the Centre refusing the mining project final forest clearance in January 2014.
Apart from the 72 mt deposit on Niyamgiri, the company was also counting on deposits that infrastructure major Larsen & Toubro had claim to. In June 2012 Vedanta acquired 24.5% stake in L&T’s Odisha project. While the state has recommended rights to the bauxite deposits in favour of L&T it has also mandated that it set up a separate 3mt refinery.
Meanwhile, Odisha has recommended reservation of Karalapat deposit in favour of Orissa Mining Corporation(OMC).
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