Vedanta to shut Odisha refinery | business | Hindustan Times
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Vedanta to shut Odisha refinery

business Updated: Dec 04, 2012 22:25 IST
HT Correspondent

The Vedanta group said on Tuesday it will go ahead with its plan to temporarily suspend operations at its 1-million-tonne alumina refinery at Odisha’s Lanjigarh from Wednesday due to a shortage of bauxite, a key raw material for producing alumina.

The move will impact about 7,000 jobs in the state. The firm had given a closure notice to the state government three months ago citing bauxite shortage as the primary reason.

“We are yet to get any guidance on bauxite availability from the Odisha government,” said a senior company official. “We had said in the past that we may have to temporarily suspend operations at the (Lanjigarh) refinery) from December 5. Since bauxite is unvailable, the plant has become unsustainable.”

Vedanta Aluminium Ltd (VAL) gave a 3-month notice in September to the state government that it would shut the factory in December if bauxite is not made available.

The firm reasoned that it had been running the plant at lower capacity, incurring losses. It had shut the refinery for 9 days in October.

VAL had invested Rs. 50,000 crore in the refinery along with an aluminium smelter of 1.5 mtpa and a captive power plant.

The refinery was meant to use high-grade bauxite from Odisha’s mines and runs on environment-friendly low pressure and low temperature technology.

Alumina is the intermediate product to produce aluminium. Three tonnes of bauxite is required to produce one tonne of alumina and half a tonne of aluminium can be extracted from one tonne of alumina.

At 1.7 billion tonnes, Odisha has two-third of India’s bauxite reserves.

“Raw material availability is the biggest incentive for setting up a factory in a particular location,” the official said. “However if that is not there, then it becomes difficult.”