Bhubaneswar: Vedanta group has decided to shut down its one million tonne alumina refinery at Lanjigarh in Odisha's Kalahandi district from tomorrow due to severe scarcity of bauxite, a senior company official said.
"We are forced to close down Lanjigarh refinery from tomorrow due to dwindling stocks of bauxite.
Despite concerted efforts over the past three months for sustainable supplies of bauxite we have been unable to find any solution," CEO of Vedanta Aluminium Mukesh Kumar said over phone.
"For the last three days, we have run the unit at around 20 percent of the capacity incurring heavy loss and from tomorrow we have to close down the unit due to lack of raw material. We have no other option now," he said.
The mining conglomerate, which runs the alumina refinery of Vedanta Aluminium Ltd (VAL), had given a closure notice to Odisha government three months ago about closing operations from December 5 citing severe shortage of bauxite as the main reason for the shutdown.
Stating that 10,000-11,000 tonnes of bauxite was required per day for normal functioning of the refinery, Kumar said the company explored several sources outside Odisha, but failed to secure more than 3,000 tonnes daily.
VAL, in its closure notice to Odisha's labour and industries department served on September 5, had said that running the alumina refinery was no longer sustainable "unless Odisha government finds a solution for supply of bauxite".
Stating that the shutdown of the refinery was likely to affect about 3,000 workforce directly and around 4,500 indirectly, the official said "we are not contemplating any retrenchment at the moment".
The company has invested about Rs 50,000 crore in the refinery along with an aluminium smelter of 1.5 mtpa and a captive power plant in Jharsuguda.
Top officials of Vedanta group, including its Chairman Anil Agrawal and VAL's Managing Director S K Roongta, had met Chief Minister Naveen Patnaik and the chief secretary in the last 3 months.
As the company was unable to get bauxite in Odisha, sourcing it from other states increased the landed logistics cost for VAL to about Rs 2,300 per tonne, thereby increasing the alumina production cost to more than Rs 19,000 per tonne.
Closure of Lanjigarh refinery would also affect VAL's aluminium smelter at Jharsuguda, which has an installed capacity of 1.5 MTPA, but has been running at 0.5 MTPA capacity, sources said.
The Lanjigarh refinery was meant to use high-grade bauxite available in Odisha and ran on environment-friendly low pressure and low temperature technology, company officials said.
Alumina is the intermediate product for producing aluminium. Three tonne of bauxite is required to produce one tonne of alumina and half a tonne of aluminium could be extracted from one tonne of alumina.
With about 1.7 billion tonne, Odisha has nearly two-third of India's total bauxite reserves. They are considered high grade due to low silica content.