By Bizodisha Bureau, Bhubaneswar, September 5, 2018: A decade after Vedanta started its operation in Odisha, the state has made bauxite available to the company to run its two million ton per annum alumina refinery at Lanjigarh in Kalahandi district recently.

The aluminium major has been managing to run its refinery since 2007 by importing bauxite from other states and abroad. The company has been importing bauxite from countries like Brazil and Guinea and other states like Andhra Pradesh and Gujarat to feed its 2 mtpa refinery.

The Vedanta got bauxite from Kodingamali mines, located about 152 km from its refinery at Lanjigarh. OMC at present meets only five per cent of its bauxite requirement.

But the big task before the Company is the sharp rally in spot alumina prices along with the depreciating rupee. The company is worried over the escalating alumina prices on its aluminium smelting costs as imports meet about 60 per cent of its alumina requirement for smelters. Stronger global prices of alumina is threatening to shoot up the Company’s import bill and consequently have a bearing on its aluminium making cost, experts said here.

Vedanta’s cost of alumina production was $1934 per tonne in April-June quarter – 12 per cent higher than the corresponding quarter of last fiscal. The company, in a statement, attributed the rising cost to commodity inflation across inputs such as imported alumina, coal, caustic soda and carbon.

The problem for Vedanta mounts up as the forecast for alumina prices remains bullish amid supply constraints. As of now, Vedanta’s aluminium production cost stands at around $1900 per tonne. But, the mounting alumina prices are set to enhance production cost for the company by $300 per tonne, an analyst said.