Vedanta to close Lanjigarh refinery on Dec 5

Times of India, Sept 7, 2012
Rajaram Satapathy
BHUBANESWAR: With no bauxite in hand and mines stuck under regulatory issues, the Vedanta Aluminium Ltd (VAL) has decided to shut down its refinery at Lanjigarh in Kalahandi district. VAL president and Lanjigarh plant's chief operating officer (COO) Dr Mukesh Kumar on Thursday intimated the state government that the factory was no more in a position to run and would be closed from December 5.
VAL's decision is bound to send a wrong signal amongst the prospective investors that mineral-rich Odisha, contrary to the claims of the state government, is far from welcoming industries. The VAL staff carried Kumar's letter addressed to the labour and employment secretary and handed over in the respective department. Copies of the letter were also given to the chief secretary, industry secretary and director of factories and boilers. "Such a big investment in the state is in jeopardy. No one in the government seems bothered. Our people wanted to meet the secretaries, but were told that they had no time," said a senior VAL official.
Anil Agarwal's VAL is the only private industrial house to have invested more than Rs 50,000 crore in Odisha for setting up the integrated alumina, aluminium complex. This included 1mtpa refinery at Lanjigarh due for expansion to 6 mtpa capacity 70 per cent work on which has already been completed, 1.75 mtpa capacity aluminium smelter, 1215 mw captive power plant and 2400 mw independent power plant, all at Jharsuguda. "In retrospect we feel it was a bad decision to go for such huge investments here," remarked a senior VAL official. Kumar's letter blamed the state government for not doing enough to provide raw material, bauxite, for the refinery leading to its closure.
"VAL had set up the refinery entailing huge investment in a specific background wherein the government of Odisha had agreed to supply bauxite," the letter said, adding detail studies were undertaken on various aspects before signing the final MoU on 7th April 2003 for setting up the refinery. "It is only on the basis of the MoUs and agreements with the government of Odisha for supply of bauxite that VAL agreed to set up an alumina refinery at Lanjigarh," the letter said. Elaborating, the VAL said it had in the past several years has submitted 26 applications to the state government for prospective license/mining lease of bauxite. "Unfortunately none of the applications could be processed and forwarded for allotment of bauxite mines," the company's letter stated.
Kumar's letter highlighted how VAL finding the government not keeping its promise for supply of bauxite had desperately tried to source raw materials from different other places including going for imports at high costs. But nothing seemed helping the plant providing livelihood to hundreds of families run smoothly. "As such, it has become difficult to sustain operations without causing damage to the plant, equipment and machinery. The unit has already incurred financial losses to the tune of more than Rs 2500 crores," the letter said adding that Lanjigarh factory was built exclusively with 'low pressure and low temperature technology to treat bauxite available only in the Eastern Ghats and mostly in Odisha.' The VAL said the prevailing situation has left it with no choice but to take such a 'painful' decision to close down the factory as 'further operation is not feasible'.