Vedanta update

Vedanta update

13th April 2007

Last week, Vedanta Resources plc announced its first quarter results for this year. Significant among the announcements is confirmation that the hugely controversial Lanjigarh refinery in Orissa has been "charging...sourced bauxite, in the last week of March 2007 in the first of the two streams."

MALCO, based in Tamil Nadu, and BALCO (Chhattisgarh) are producing above their "rated capacity" - which is scarcely surprising since it's known that BALCO has been providing bauxite to Lanjigarh, as well as Korba, for some time, given that the company has still not received permits to mine for bauxite within Orissa.

Also, according to the company: "One unit of the [Lanjigarh] captive power plant was commissioned in February 2007 and is under stabilisation."

This is not unexpected: indeed, the trial start up of the refinery was first mooted for a year ago and, more recently, for early March 2007. More significant is that, "After completion of the processing cycle, output of alumina will commence by the end of the first quarter of FY 2008. "

In other words, commercial production from Lanjigarh is not now planned until two full years after Vedanta initially hoped the refinery would go on-stream. The illegal smelter at Jharsaguda is now expected to be up and running by mid-2009.

Although none of this indicates that Vedanta has been deterred by massive opposition from abandoning its Orissa exploits, there is little doubt that this emphatic resistance has set back the company's schedules by up to two years.

[comment from Nostromo Research, 13 April 2007]