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Vedanta targets 80-90% capacity utilisation on better bauxite supply (Jan.)


Economic Times , Delhi, Wednesday 22nd January 2014


KOLKATA: Vedanta Aluminium (VAL) is targeting to achieve a capacity utilisation of 80-90 per cent this month, boosted by availability of bauxite from several sources, even as its plans for captive mining in Odisha remains thwarted by the ministry of environment & forests (MoEF) refusal to provide stage II forest clearance to the project.

This is the first time since December 2012, when VAL was forced to shut down its refinery due to paucity of bauxite that the Vedanta group has managed to operate it at over 80 per cent capacity. In the last few months, VAL has been operating its alumina refinery in Lanjigarh in Odisha at around 50 to 60 per cent capacity due to insufficient supply of bauxite.

"We are looking at 80-90 per cent capacity utilization this month," Mukesh Kumar, president & chief operating officer, VAL said. Bauxite is further processed to produce alumina at the one million tonne refinery at Lanjigarh. The alumina is used at VAL's smelter in Jharsuguda and at Korba II smelter of Vedanta group firm, Balco to produce the metal aluminium. However, it remains to be seen whether VAL is able to maintain a similar capacity utilisation at the plant in the coming months.

"We require nearly 3.3 lakh tonne (lt) of bauxite to operate at full capacity. However, so far we have been getting around 2.2 lt on an average," he added. The company currently sources bauxite from different domestic and foreign sources, including its group firm, Balco.

While 30-40 per cent of bauxite requirement is obtained from Balco, it sources another 30 per cent from Jharkhand, Maharashtra and Gujarat, while imports accounts for 10-15 per cent of its needs. "It is difficult to depend on imports since, it is almost twice as costly as procuring it from domestic sources. For instance, while bauxite from Maharashtra or Gujarat comes at Rs 2,800 per tonne, it could amount to nearly Rs 5,000 per tonne through imports," a metals sector analyst said.

Last Friday, Lanjigarh observed a day's bandh in protest against uncertainty surrounding the fate of the plant. Following the MoEF decision against mining at Niyamgiri, locals in Lanjigarh have been apprehending closure of the unit.

On January 8, the MoEF rejected a proposal to provide stage-II forest clearance to Orissa Mining Corporation (OMC) -which has an agreement to supply bauxite to VAL -- for mining ore in Kalahandi and Rayagada districts. The order said that 12 Palli Sabhas of these districts had unanimously decided not to allow any mining activity on Niyam Dongar hill, a place of worship for the local Dongria Kondh tribe.

Incidentally, VAL employs nearly 1,000 locally. Alongwith associated businesses in and around the plant, some 0,000 people depend on the unit for their livelihood.