Vedanta Aluminium has set a capital expenditure target of $300 million for the current fiscal , it’s Chief Executive Officer Ajay Kapur has said.
“Our most significant expansion will be at our Lanjigarh alumina refinery,” Kapur said. “Subject to government approvals, the majority of our projects should be completed over the next 2-3 years,” Kapur told BusinessLine .
Vedanta Aluminium, a vertical of Vedanta Ltd, is India's largest aluminium maker, producing 1.96 million tonnes in 2020-21. The business aims to ramp up its annual aluminium production capacity to 3 million tonnes, Kapur said.
Raw material
The production of aluminium requires twice the amount of alumina as raw material. Vedanta is raising the annual capacity of the Lanjigarh refinery, which produces alumina from bauxite, to 5 million tonnes from 2 million tonnes. Additionally, Vedanta also imported around 2 million tonnes of alumina in the just-concluded financial year, Kapur said. Both the Lanjigarh refinery and the firm's flagship Jharsuguda aluminium plant are situated in Odisha.
Vedanta last year won a case in the Supreme Court against public-sector alumina producer National Aluminium Company Ltd (NALCO) to be able to buy the alumina that NALCO exports. Though both NALCO and Vedanta have their production units in Odisha, the order requires NALCO to supply alumina to Vedanta at the Visakhapatnam port. Given the logistical hurdles, imports have remained a preferred way to meet the shortfall in Vedanta’s in-house production of alumina, Kapur added.
The expansion of alumina capacity is aimed at plugging this gap, but the Lanjigarh refinery has also faced difficulty in sourcing its own raw material bauxite.
Bauxite reserves
Alumina production requires three times the amount of bauxite. While half of India's vast bauxite reserves are based in Odisha, no bauxite mines have been successfully auctioned across India over the past six years. Vedanta met half of its bauxite demand through domestic procurement from public-sector miners and the other half from imports during last fiscal, Kapur said.
“We have urged the State government to expeditiously bring bauxite mines into auction,” he added.
The firm also plans to set up an industrial park at Jharsuguda jointly with the Odisha government, Kapur said. “Our smelter and power plant can supply hot metal and electricity to MSME units at the aluminium park, who can be given a favourable policy environment,” he said, adding that the business plans to spend ₹100 crore on this project.
Vedanta has committed to supply 3 lakh tonnes of hot metal to the proposed park, to be built in the vicinity of its aluminium smelter, where downstream ancillary industries would be able to set up their manufacturing units and draw hot metal from the smelter to manufacture their end-product.
“This will save them major transportation and remelting cost. We are under discussion with the Odisha government to finalise the modalities,” Kapur said.