After being vilified for more than seven years by activists and the green lobby, political heavyweights such as Rahul Gandhi and even a handful of conscious capitalists for his mining exploits, or rebuked by the British government, international pop stars and Hollywood legends for his apparent failure to respect the rights of an indigenous tribe, Anil Agarwal finally has some respite - and hopes of a turnaround for his mega aluminium operations in Odisha.
Agarwal's flagship VedantaBSE 1.77 % has been awarded two bauxite mines by the state government, a top official said, confirming the move that will help reverse the massive financial drain the group has endured since 2013.
The two mines with 15 mtpa bauxite reserves can take care of 75% of Vedanta's needs of 20 mtpa. The mining output will help Vedanta convert it into 6 mtpa of alumina, which in turn will be refined to 3 mtpa of aluminium. That would mean doubling of current capacity from 1.75 mtpa.
"We have been pleading with the state for a long time. They have always been proactive. Now finally we can ramp up production and then expand the total capacity. I am very hopeful that the worst is over for us," Agarwal said, confirming the development in an exclusive interview with ETin Davos.
Vedanta has invested more than.`50,000 crore in Odisha in two smelters, refinery, and captive and merchant power plants, making it the largest investment by a corporate house in last 15 years in the state. The two smelters are in Jharsuguda, with the combined capacity of 1.75 million tonnes, representing the world's largest single-location aluminum facility.
The aluminum refinery is in Lanjigarh and has a capacity of 1 mtpa. It has already sought approvals to expand this capacity to 6 mtpa from the state government.
Vedanta was involved in a joint venture with the Odisha Mining Corporation Ltd (OMCL), a stateowned company, to develop a bauxite mine in the Niyamgiri hills and supply material to the conglomerate's nearby alumina refinery. But since 2013, the company has been hamstrung as local villages voted against its mining operations in Rayagada and Kalahandi districts.
Unavailability of bauxite meant the company's Lanjigarh alumina factory would languish from raw material crunch. The unit has been compelled to run on low capacity on imported bauxite. As a result, the Jharsuguda smelter is unable to source sufficient alumina, the feedstock for aluminium, in house. Currently, the company is estimated to be importing 60 to 65% of its alumina requirement from different countries. This has meant a production of a paltry 0.96 million tonnes (mt) of aluminium across ..
"Vedanta now buys alumina at $300/tonne whereas if it produced on its own, it would've cost $180/tonne. The operations are still loss making at a PAT level due to the high debt overhang," said Rakesh Arora, managing partner, Go India Advisors.
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