MAC: Mines and Communities

India: Vedanta re-discovers its bauxite mojo

Published by MAC on 2012-10-23
Source: The Hindu

But loses land for steel plant and is accused of cheating

To say that London-listed, India-focused, Vedanta Resources is subject to "occasional setbacks" would be a distinct under-statement.

Last month,  its iron ore operations in Goa were shut down, pending investigation of  alleged irregularities. See: India's state of Goa shuts all iron mines

Now, Vedanta's subsidiary, Sterlite Iron and Steel, has been told it can't build a steel plant in Orissa's Keonjhar district, since this would adversely impact on irrigated lands.

As if this weren't rebuff enough, the company is also accused by the Orissa state electricity commission of cheating.

Instead of buying power for its Jharsaguda aluminium smelter from the licensed distributor, Reliance-Infra, it did so from its own Sterlite energy subsidiary. 

Vedanta has been told to repay Reliance around US$3 million in compensation.


The Jarsaguda smelter takes alumina from Vedanta's Lanjigarh refinery, also located in Orissa, adjacent to the bauxite-rich Nyamgiri hill range.  

The company still awaits a judgment by India's Supreme Court on a claim by its junior partner, Orissa's state mining company, that the central Ministry of Environment and Forests (MoEF) wrongfully banned the mining of Nyamgiri in 2010.

Just before this case came to court, Vedanta declared it was about to run out of feed for the Lanjigarh refinery, and would indefinitely suspend these operations in early December.

This was perceived by some commentators as a flagrant "bluff", calculated to pressure the Orissa government into granting other bauxite leases. Or even an attempt to influence  the Supreme Court  into over-turning the MoEF ban. See:Indian activist calls Vedanta's bauxite bluff

A week ago, Vedanta did indeed shut down the refinery.

Then, hey presto, just last weekend it announced that the plant was about to re-open, since the company had found fresh supplies of bauxite.

These would come from Gujarat's state mining corporation and Vedanta's  own mines in Chhattisgarh.

How convenient!

[Comment by Nostromo Research, 21 October 2012]

Land acquisition process withdrawn for Sterlite's steel plant

The MoU was signed with the State government in 2004

The Hindu

19 October 2012

Bhubaneswar - The [Orissa] State government has formally started withdrawal of land acquisition process taken up for setting up a steel plant by Sterlite Iron and Steel Company (SISC) in Keonjhar district.

Office of Revenue Divisional Commission (Northern Division) submitted withdrawal of land acquisition notification for land measuring nearly 1,800 acres from eight villages in Keonjhar.

SISC, a sister concern of Sterlite group, had signed memorandum of understanding with the State government in 2004, but the project never took off. It was always mired in controversy.

A majority of people in Palaspanga area in Keonjhar district were opposed to the project.

Villages where land acquisition process were withdrawn included Darnardanpur (242.32 acres), Gopinathpur (120.58 acres), Narsinghpur (54.24 acres), Singraisuan (123.67 acres), Tikarpada (612.64 acres), Mahadeijoda (270.37 acres), Kadagarh (380.08 acres) and Silisuan (67.07 acre).

As the project did not progress, Vedanta Group, of which Sterlite is a part, had tried to rope in on infrastructure major Larsen and Toubro.

 In 2010 Vedanta Chairman Anil Agarwal had said the company was negotiating with L&T for setting up of a steel plant. Vedanta Group was supposed to invest Rs. 12,502 crore.

Sources in Steel and Mines department said since the land patches were irrigated land, the project was shelved at that place for the time being. Government is hopeful that the project would come up somewhere else.

This is the second industry of Vedanta Group after Vedanta Alumina Refinery at Lanjigarh of Odisha that had attracted trouble.

On its part the State government had already issued under section 6 (1) notification Land Acquisition Act.

Vedanta to restart Lanjigarh refinery on Monday after supply resumption

Jayajit Dash

The Smart Investor

21 October 2012

VAL will first start its captive co-generating plant (CPP) to generate steam, necessary for running the refinery

Bhubaneswar - A week after a temporary shutdown of its alumina refinery at Lanjigarh, Odisha, Vedanta Aluminium Ltd (VAL), buoyed by bauxite supplies of 40,000 tonnes from Bharat Aluminum Company's (Balco) Kawardah mines in Chhattisgarh, is readying to restart the plant on Monday.

VAL was forced to shut the refinery last Saturday due to the drying up of bauxite supplies.

"Nearly 40,000 tonnes of bauxite have reached our refinery premises. We have sourced the raw material from Balco's Kawardah mines. The bauxite stock will be  enough to run our plant for five-six days if we operate it at 60-70 per cent capacity, the minimum threshold value of the plant", a company source informed Business Standard.

Balco has two captive bauxite mines in Chhattisgarh- Kawardah and Mainpat, with a combined production capacity of 1.9 million tonnes an annum. The Mainpat mine
is currently closed. VAL needs 10,000 tonnes of bauxite each day to run the plant at full capacity.

VAL will first start its captive co-generating plant (CPP) to generate steam, necessary to run the refinery. It may be noted that with the shutdown of the refinery, VAL had also closed its CPP last Saturday, as there was no consumption of steam.

Meanwhile, VAL is eyeing the bauxite supplies from Gujarat Mineral Development Corporation (GMDC) after bagging the contract from the state PSU.

"The first bauxite shipment has been loaded by GMDC. We hope to get it within a few days. In all, we will get 90,000 tonnes of bauxite from GMDC", said a source.

The company is also in talks with private firms of Gujarat and Maharashtra engaged in bauxite exports.

VAL had approached both Federation of Indian Mineral Industries (Fimi) and Federation of Indian Chambers of Commerce & Industry (Ficci), seeking a ban on bauxite exports.

While VAL was struggling to keep its refinery operations afloat for want of bauxite, the raw material continued to be exported by private miners in Gujarat and Maharashtra due to better price realisations.

VAL has not been alloted any mining lease in Odisha and fully depends on externally-sourced bauxite to run its refinery. It had entered into a pact with state-controlled miner Odisha Mining Corporation (OMC) for supply of bauxite from Niyamgiri hills.

However, attempts to mine bauxite in the ecologically-sensitive hills were thwarted by the Union environment ministry which scrapped the stage-II forest clearance on August 24, 2010.

Around 6,500 people, including 550 employed directly, 5,000 engaged indirectly and 1,000 self-employed, in and around the plant depend on the VAL refinery for their livelihood. The company claimed to have spent Rs 150 crore on the development of the local area and community.

OERC whip on Vedanta



14 October 2012

The Vedanta Aluminium Ltd (VAL) was found illegally sourcing power from Group Company, Sterlite Energy Limited (SEL) causing losses to the tune of Rs 15crores [around US$ 3 million] to the Reliance Infra-owned licensed distribution company WESCO in Odisha [Orissa].

Holding the activities of VAL as "illegal", the Odisha Electricity Regulatory Commission (OERC) has directed the Vedanta to cough up the amount due to the DISCOM [Distribution Company].

Importantly, the Commission, while disposing of the case, has defined the terms "Open Access' and "deemed licensee" in a Special Economic Zone (SEZ) which will have far reaching ramifications.

The Vedanta Aluminium Limited (VAL) aluminum manufacturing unit at Jharsuguda in Odisha which has been notified as a SEZ was sourcing power directly from Group company SEL, Independent Power Plant (IPP) located adjacent to the SEZ through a dedicated 400 KV double circuit transmission line.

Claiming that the VAL-SEZ's sourcing power from SEL-IPP amounts to Open Access drawl of power, the WESCO, which is the sole licensee for power distribution in the area, demanded cross subsidy surcharge on the quantum of power availed by VAL-SEZ.

The Odisha Power Transmission Corporation Limited (OPTCL), the sole licensee for transmission business, also raised objection to the SEL-IPP's "illegal" laying of 400 KV line in their areas of operation. GRIDCO, the sole bulk power supplier, and the SLDC also become party to the case protesting against these activities of Vedanta.

Interestingly, when the OERC construed that the VAL-SEZ's sourcing of power is Open Access drawl of power and directed the Vedanta to pay the cross-subsidy surcharge to WESCO, Vedanta came before the Commission with two applications seeking approval for PPA between VAL-SEZ and SEL-IPP, and license for VAL -SEZ to carryout distribution business inside the SEZ area.

Vedanta claimed that the SEZ notification has given the promoter the status of deemed licensee. "So, according distribution licensee by the OERC is only a formality."

It claimed that there is no illegality in VAL-SEZ directly sourcing power from SEL-IPP and it does not amount to Open Access drawl of power. Ridiculously, Vedanta put forth that the individual units of the aluminium plant such as pot lines, carbon plant, cast house etc. are individual consumers of power.

The three-member Commission, comprising Chairman SP Nanda, members B K Mishra and S.P.Swain, rejected the applications of Vedanta and directed the company to pay the cross subsidy surcharge to the WESCO.

"Consequent upon the rejection of this application the applicant is be treated as consumer of WESCO, the existing DISCOM of the area. As a result M/s. VAL-SEZ has to pay cross-subsidy surcharge to WESCO for Open Access drawl of power from M/s. SEL", observed the OERC.

While passing the order, last week, the OERC has also made some adverse remarks about the company

"It has been stated earlier that much before the application for PPA with M/s. SEL and the present application for grant of distribution license were filed, the applicant has been enjoying power in an illegal and unauthorized manner from M/s. SEL through a 400 KV double circuit transmission line."

Stating that the present application for grant of distribution license is a ploy by which the consumer wants to escape from payment of open access charges, the Commission has observed that this is a matter where the substance should prevail over form - the applicant cannot take shelter under a web of technicalities to subvert the purpose of the Act.

"This is not a genuine application for taking a distribution license for giving supply of electricity to genuine consumers in a particular area to increase competition and efficiency. This is an attempt to avoid payment of open access charges for unauthorized drawl of power from M/s. SEL for a number of years", remarked the Commission.



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