Vedanta Aluminium, a unit of London based Vedanta Resources, will shut down its one million tonne alumina refinery from tomorrow. The company had issued a three-month advance notice in September to close the refinery from December 5 and it has no bauxite stock to run the plant beyond the deadline.
“The bauxite stock is zero. Despite our best efforts we could not secure bauxite supply for the plant. So we are forced to shut down the refinery from tomorrow as per the notice sent to the state government earlier”, Mukesh Kumar, chief operating officer, VAL, told Business Standard.
Though stoppage of refinery will be official tomorrow, sources said, the plant has already come to a grinding halt for last couple of days due to want of bauxite. Before that the refinery was operating at only 25% of its capacity for some time.
VAL’s refinery was facing raw material problem ever since going on stream in August, 2007. The company had entered into a joint venture with Odisha Mining Corporation (OMC), which had a 78 million tonne bauxite deposit to its name at Niyamgiri Hills near Lanjigarh, for sourcing of ore for the plant. But the mining could not be taken up due to protests by locals and green groups.
The ministry of Environment and Forest (MoEF) had further dealt a blow to the project by rejecting the Stage-II forest clearance for the mining operation on August 24, 2010.
The closure of the refinery has put at stake the livelihood of 6,500 people, including 550 permanent employees and 5,000 engaged indirectly and 1,000 self-employed in and around the plant.
When contacted the state labour and employment secretary CTM Suguna said, “We have no role in the closure of the plant”. She, however, declined to discuss on the fate of employees or their rehabilitation.
After being denied access to the Niyamgiri bauxite deposits, VAL was dependent on bauxite supplies from other states like Chhatishgarh, Jharkhand, Andhra Pradesh and Gujarat to keep its refinery operation afloat. But getting bauxite from other states had become increasingly difficult of late for regulatory, logistic and procedural issues forcing the company to bring down the capacity utilization to only 20 to 30 percent, which was “economically unviable and technical unsound”.
The company, Kumar claimed, had incurred a loss of about Rs 2,500 crore on an investment of Rs 5,000 crore on the Lanjigarh plant so far due to last 5 years’ of stunted operation.
Following Niyamgiri debacle, VAL had filed 26 applications with the state government seeking alternative sources of bauxite. The state government is yet to take any action on them. The company top brass including group chairman Anil Agrawal and VAL MD SK Rungta had recently called on the state chief minister and chief secretary to impress upon them the urgent need of bauxite linkage, but it has also not yielded any result.
“There is no readily available bauxite that we can offer to Vedanta Aluminium. There is no dearth of bauxite deposits in the state. But the mines have to be opened and these need regulatory approvals. Moreover, the Niyamgiri case is still locked up in the Supreme Court and there is nothing the state government can do about it", state chief secretary B K Patnaik had said recently.
OMC had gone to Supreme Court against the MoEF decision to scrap forest clearance for bauxite mining at Niyamgiri Hills. The next date and possibly the concluding part of the hearing on the case is scheduled on December 6.
Earlier, VAL had closed the refinery temporarily in October after all its bauxite stocks exhausted. It had reopened the refinery after a week following bauxite supplies of about 40,000 tonnes from Bharat Aluminum Company's (Balco) Kawardah mines in Chhattisgarh and about 92,000 tonne from Gujarat Mineral Development Corporation (GMDC).
“We are still trying to secure bauxite from different sources. Our requirement is about 10,000 tonne of bauxite per day. Unlike last time, we won’t reopen the refinery unless we have a stock for at least 2 to 3 months”, Kumar said.
