By Ajoy K. Das
KOLKATA, India—Vedanta Aluminium Ltd. (VAL), an arm of Vedanta Resources Ltd., has earmarked capital expenditure of an estimated $300 million for the current fiscal year to expand its alumina refinery at Lanjigarh in eastern state of Odisha.
The project entailed ramping up capacity of the alumina refinery to 5 million metric tons per year (mt/y) from 2 million mt/y, which would enable VAL to increase its aluminum smelting capacity to 3 million mt/y from 1.96 million mt/y metal production achieved in 2020-2021 fiscal year.
However, success and viability of the project would largely be hinged on the company being able to secure domestic supplies of bauxite. VAL had to import about 2 million mt of alumina in 2020-2021 to feed its smelter, owing to shortage of domestic availability of bauxite. The production of 1 million mt of alumina requires about 3 million mt of bauxite.
Industry analysts pointed out that the biggest impediment to increase India’s domestic aluminum production to government’s target of 12 million mt/y from the current production of 4 million mt/y would require an increase in domestic bauxite mining output to 72 million mt/y from 24 million mt/y.
However, despite India having the fifth largest bauxite reserves in the world, the country has failed to auction any block to metal companies during the last six years and as a result spent $400 million on import of metallurgical grade bauxite to feed domestic alumina refineries, according to government estimates.