Vedanta taps Gujarat for bauxite for Orissa refinery

Bhubaneswar (IANS)- Anil Agarwal-led Vedanta Resources has begun talks with the Gujarat government to ensure long-term supply of bauxite for its refinery in Orissa's Kalahandi district after its mining project in the Niyamgiri hills was refused permission by the central government on environmental grounds.

Mukesh Kumar, chief operating officer of Vedanta Aluminium Ltd, said the company is also prospecting the raw material in other states after the environment ministry rejected its mining plan near the refinery.

"We are trying to sign a pact soon with the Gujarat Mineral Development Corporation (GMDC) for supply of around 600,000 to 800,000 tonnes of bauxite every year for our refinery. They have already agreed for 500,000  tonnes," Kumar tp;d IANS in an interview.

GMDC is a government of Gujarat undertaking engaged in mining of minerals and developing mineral-based industrial products.

"In the recent past we had several rounds of discussions with GMDC officials and the result was encouraging. In the next 15-20 days, we are likely to finalise something with them," he said.

Environment and Forests Minister Jairam Ramesh last week rejected the company's bauxite mining project in the Niyamgiri hills in Lanjigarh, saying it will affect the environment and disturb primitive tribes living in the area for ages.

The one million-tonne alumina refinery of the company set up in 2008 has been running on bauxite from other mineral-rich states, including Gujarat, Andhra Pradesh, Chhattisgarh and Jharkhand, Kumar said.

The approval to mine bauxite in the Niyamgiri hills located closer to the plant could have helped the company cut operating costs.

Kumar said he has requested the state government to provide alternative mines in nearby areas. "Since this matter (mining plan at Niyamgiri) is not getting resolved, we told the Orissa government that we cannot wait any more and kindly look for some alternative source of bauxite."

"More then 500-600 million tonnes of bauxite deposits are there within 40 km of Lanjigarh. I told them to look into them and select one," he said.

The alumina refinery in Lanjigarh began operations about three years ago and availability of raw material has always been a challenge.

"We have been suffering for the last three years. Our plant capacity is one million tonnes but still we are not in a position to operate 100 per cent capacity. We have gone to maximum 80 per cent and it is because the type of bauxite we want is not available," Kumar said.

The refinery is currently bringing 200,000 of bauxite every month from neighbouring states to produce alumina.

"Right now we have no alternative other than to continue our operations with outsourced bauxite as getting of alternative mines may again take a minimum of two years due to various procedures. We require at least six million tonnes of bauxite every year to run the refinery with optimum capacity," Kumar told IANS.

About getting bauxite from Gujarat, he said: "They have plenty of bauxite, but we are concerned about the quality. Their bauxite contains high silica of eight to nine per cent and we want four per cent. They are examining how to reduce the silica content."

"If it gets finalised, we have to bring the bauxite by sea from Gujarat up to Visakhapatnam from where it would be brought by road and rail to our plant.

"The landing cost of the raw materials is likely to go very high ...it may go up to Rs.2,400-2,500 per tonne, but we have no choice," he said, adding that the company is also trying to get bauxite from other states.