India's bauxite baron grabs more Orissa mines
Published by MAC on 2018-02-26Source: Economic Times (India)
Or does he?
A bluff, grinning, Anil Agarwal chose the recent World Economic Forum to announce that his majority-owned Vedanta Resources plc had now cracked its problem of accessing Orissa's bauxite resources.
It's a problem he's faced for six years - ever since the Supreme Court ruled out any attempt to access Orissa's Nyamgiri hills, after the traditional land owners unanimously rejected it. Following this, the ministry of the environment also nixed Agarwal's proposed plan to expand the adjacent Lanjigarh alumina refinery (See: Indian minister rejects Vedanta plan) .
But, as he beamingly strutted his stuff in the shadow of the Davos mountains in January, the Vedanta chairperson considered himself well on the way to securing the bauxite he'd been cheated of, having meanwhile been forced to expensivley import the aluminium raw material from other states and countries.
However, typically, he seemed to be jumping the gun.
Last week, the Orissa government confirmed it had cleared the mining of bauxite reserves at Kodingamali by state-owned Orissa Mining Corporation (OMC), and would auction off another deposit called Karlapat.
In the first instance, OMC is well-known as a 'buddy-in-harm' with the UK-listed company - as they were at Nyamgiri - having long consistently served as a proxy enterprise for Vedanta.
As for Karlapat, Adivasi (tribal) organisations have argued that it "bears a unique natural ecosystem", adding that: "Karlapat forest is accepted as a sanctuary", which supports vegetation that's "more dense than Niyamgiri hills" (See: Indian tribal struggles against mining).
In both cases, it's inevitable that Vedanta will face massive Adivasi opposition, compounded by virulent reactions from national Indian groups, joined by those on the international stage.
The Davos dilettante may not be smiling quite so broadly by the time he faces shareholders at his company's London AGM later this year.
[Comment by Nostromo Research, 26 February 2018]
Vedanta bags two Odisha bauxite mines
Economic Times
28 January 2018
DAVOS: After being vilified for more than seven years by activists and the green lobby, political heavyweights such as Rahul Gandhi and even a handful of conscious capitalists for his mining exploits, or rebuked by the British government, international pop stars and Hollywood legends for his apparent failure to respect the rights of an indigenous tribe, Anil Agarwal finally has some respite – and hopes of a turnaround for his mega aluminium operations in Odisha.
Agarwal’s flagship Vedanta has been awarded two bauxite mines by the state government, a top official said, confirming the move that will help reverse the massive financial drain the group has endured since 2013.
The two mines with 15 mtpa bauxite reserves can take care of 75% of Vedanta’s needs of 20 mtpa. The mining output will help Vedanta convert it into 6 mtpa of alumina, which in turn will be refined to 3 mtpa of aluminium. That would mean doubling of current capacity from 1.75 mtpa.
“We have been pleading with the state for a long time. They have always been proactive. Now finally we can ramp up production and then expand the total capacity. I am very hopeful that the worst is over for us,” Agarwal said, confirming the development in an exclusive interview with ET in Davos.
Vedanta has invested more than`50,000 crore [around US$10 billion] in Odisha in two smelters, refinery, and captive and merchant power plants, making it the largest investment by a corporate house in last 15 years in the state. The two smelters are in Jharsuguda, with the combined capacity of 1.75 million tonnes, representing the world’s largest single-location aluminum facility.
The aluminum refinery is in Lanjigarh and has a capacity of 1 mtpa. It has already sought approvals to expand this capacity to 6 mtpa from the state government.
Vedanta was involved in a joint venture with the Odisha Mining Corporation Ltd (OMCL), a state owned company, to develop a bauxite mine in the Niyamgiri hills and supply material to the conglomerate’s nearby alumina refinery. But since 2013, the company has been hamstrung as local villages voted against its mining operation in Rayagada and Kalahandi districts.
Unavailability of bauxite meant the company's Lanjigarh alumina factory would languish from raw material crunch. The unit has been compelled to run on low capacity on imported bauxite. As a result, the Jharsuguda smelter is unable to source sufficient alumina, the feedstock for aluminium, in house. Currently, the company is estimated to be importing 60 to 65% of its alumina requirement from different countries. This has meant a production of a paltry 0.96 million tonnes (mt) of aluminium across its two facilities in Odisha and Chhattisgarh in FY17, although the expectation is of an annual output of 1.6 mt in FY18.
“Vedanta now buys alumina at $300/tonne whereas if it produced on its own, it would’ve cost $180/tonne. The operations are still loss making at a PAT [Profit After Tax] level due to the high debt overhang,” said Rakesh Arora, managing partner, Go India Advisors.
Odisha new Bauxite linkage policy to benefit Vedanta
By MEERA MOHANTY
Economic Times
21 February 2018
BHUBANESHWAR: In a move that will benefit aluminium maker Vedanta, the Odisha cabinet on Wednesday approved a long-term linkage policy for bauxite.
Anil Agarwal’s Vedanta has had a long and difficult wait for the key raw material used to make aluminium. Under the policy announced today, the Naveen Patnaik’s government will offer bauxite at market prices discovered through auctions. However, of the three aluminium makers in Odisha, state-owned NALCO, the Aditya Birla’s Hindalco. and Vedanta, it is only Vedanta that does not have a captive mine. It has been running its Lanjigarh refinery on bauxite sources from outside the operations.
Wednesday’s announcement comes weeks after the Odisha government owned Orissa Mining Corporation got all its clearances, environment and forest, allowing it to develop the first standalone bauxite mine in the state at Kodingamali.
Odisha is generously endowed with bauxite that combined with its coal and water resources has attracted billions of dollars in investments.
Odisha has bauxite reserves of 1968.86 million tonnes, annual production is only 9.2 million tonnes. The cabinet today decided that it would explore more blocks and in the future the ones that OMC failed to get clearances, it would surrendered and auctioned. Accordingly a prospecting cum mining lease for a part of the Karlapat bauxite reserve, excluding the mining lease granted to OMC, would be de-reserved and auctioned.
Under the policy, only 70 per cent of the saleable stock of bauxite would be made available for long-term linkage.
The remaining ore would be auctioned with priority given to end-users or aluminium makers. The policy clarified, the floor price for the auction from which the long-term prices would be derived, would be cost of production plus profit margin of 50 per cent.