By Nageshwar Patnaik in Bhubaneswar, November 17, 2016: A decade after investing Rs 52,000 crore in Odisha – the largest ever by a single corporate house – Anil Agarwal owned Vedanta Group is still groping in dark not knowing where it is heading for as the Odisha government is unlikely to keep its commitment to ensure bauxite supplies for Vedanta’s alumina refinery at Lanjigarh (Odisha) by March 2017.

Regulatory hurdles, lack of access to raw material – bauxite and alumina and land acquisition problems have forced Vedanta Alumna Limited [VAL] to run its refinery and smelter at one fourth of its capacities.

At 3.3 billion ton, India has the world’s fifth-largest reserve of bauxite, the principle source of aluminium. But tardy government clearances and land acquisition issues mean that most of its alumina refineries including VAL’s one million ton per annum [MTPA] refining capacity at Lanjigarh cannot operate in the absence of captive bauxite mines, leaving capacity idle.

VAL is credited with setting up Asia’s largest single location aluminium complex which has the potential enough to propel Odisha on the global map as a critical and potential aluminium hub. However, the Naveen Patnaik government’s lackadaisical approach in ensuring promised raw-material linkage to run the Lanjigarh refinery has raised alarm bell for VAL.

During Vedanta Group chairman Anil Agarwal’s last visit to Odisha recently, the state government had agreed to break the deadlock in bauxite supplies, committing to arrange bauxite from any of the mines held by state-run Odisha Mining Corporation (OMC).

Prior to that the state mines minister Prafulla Mallick had said bauxite can be arranged from OMC’s Kodingamali mines. Though there are a handful of bauxite mines under OMC’s leasehold, sourcing bauxite by March 2017 seems improbable, officials said.

“No mine owned by OMC is in a position to start production. There are a couple of mines that lack regulatory clearances. Also, one of the mines is unexplored”, they added.

Apart from Kodingamali, two key deposits- Karlapat and Sasubohumali leases have been reserved in OMC’s favour.

Vedanta has been pleading for local bauxite supplies to the state government. It has pointed to the availability of six to seven good quality bauxite mines in the periphery of its refining unit. But its efforts to source the raw material locally has come unstuck so far, widening its losses and raising a question on the long-term viability of the Lanjigarh refinery project.

Vedanta had a target of 1.5 mtpa of alumina output for which it required approximately three mtpa of bauxite. Vedanta was sourcing nearly 30% of its bauxite requirement from abroad. The balance requirement was met through supplies from states like Gujarat, Andhra Pradesh, and Chhattisgarh.