Vedanta to start refinery trial run

Vedanta to start refinery trial run

Press Trust Of India

8th June 2006

Lanjigarh (Orissa) - Vedanta Resource Plc is all set to start the trial run of its Rs 4,500 crore alumina refinery project by August even though its bauxite supply was yet to be tied up.

"We are now approaching the last leg of our refinery project here. At this pace, we will be able to start trial run from August next and most probably commercial production before the end of March next," Vedanta Alumina Limited (VAL) project director Sanjeev A Zutshi said.

The VAL had already pumped in Rs 3,000 crore for this refinery project, he said, adding that only piping to major installations remained to be completed.

Listed on the London Stock Exchange, Vedanta Resource Plc is seeking to cash in on the high aluminmum price in the international market.

In October 2004, Vedanta had signed an agreement with state-run Orissa Mining Corporation (OMC) to ensure sourcing of 150 million tonne of bauxite annually as it proposed to set up one million tonne capacity refinery project at Lanjigarh in Kalahandi district.

Lanjigarh is situated in close proximity to one of finest quality baxite reserve - niyamgiri hill range.

However, the company failed to start mining as a few environmentalists and activists filed pils in court alleging that the project would destabilise bio-diversity.

After capacity addition to smelter plant at its Balco project in Chhattisgarh and rise in aluminum price, the situation compelled the company to make the move.

"We are currently importing bauxite ores from Gujarat, Madhya Pradesh and surplus ore available at Balco site. Most of the Bauxite ore would be procured from the open market," Zutshi said.

Sources in VAL said the refinery unit would start trial run of cold and hot water and spent liquour prior to the commissioning of the refinery within the next two months.

The refinery has piled up a stock over 40,000 metric tonne of bauxite lump ore. A VAL engineer said while 10,000 metric tonne of bauxite would be utilised for carpeting, the rest would go for crushing.

The ore would be thrice crushed to reduce around 80 mm lump to 1.2 mm thin chips. "The imported bauxite ore is not as qualitative as was expected from Niyamgiri hill range," Zutshi said.

Acccording to a company estimate, the Niyamgiri Bauxite ore contains around 46 per cent of alumina content while the imported ore has 39 per cent of alumina content.

Similarly, crushing and grinding of ore imported from other states would consume more energy compared to reducing the "soft" ore of the east coast bauxite ores.

"Of course, the company would not get the margin of profit by not being able to use the niyamgiri bauxite ore. The cost of production would rise as there are no proper roads to handle such a large cargo," he said, adding that the margin of loss would not be "significant".

In case Vedanta failed to get the mines, the refinery might face problems, sources said. The company, however, put up a brave face on this front.

"We are not worried over sourcing bauxite ore for our project. Even if we continue to import ore from open market, the project will not run into losses," Zutshi said.

The project director of the refinery said, "as per the agreement, the state government had committed to supply 150 million tonne of ore.

Since, the Niyamgiri hill range has an estimated reserve of 75 million tonne, it has to ensure rest 75 million tonne ore for us."