Importance of The Breached Lanjigarh Alumina Refinery For Vedanta
The refinery forms an integral part of Vedanta's integrated aluminium business, supplying alumina to the company's smelters.
India's largest aluminium producer, Vedanta Aluminium's process water storage facility at the company's Lanjigarh alumina refinery in Odisha was breached on Sept 15. The breach was caused due to unprecedented rains in the area, as per the company's spokesperson.
Alumina is the direct feedstock for aluminium production and the only practical way to obtain pure aluminum metal. Thus, the breach at the refinery's water storage facility may put a risk to Vedanta's alumina production.
About the Lanjigarh Alumina Refinery
The Lanjigarh Refinery has a total aluminium capacity of 3.5 million tonnes per annum and alumina capacity of 2 million tonnes per annum, as of FY24. The alumina refinery forms an integral part of Vedanta's integrated aluminum business, supplying alumina to the company's own aluminum smelters.
The company has also been on a pathway to increase its alumina refinery capacity from 2 to 3 million tonnes per annum. Management expects the full ramp up to 3.5 million tonnes by the fourth quarter of the ongoing financial year.
The breached facility could cause delay in this ramp-up. Aluminum producers have been growing their focus on alumina supply and pricing as the rising alumina costs have been putting pressure on smelter margins. Alumina prices have risen almost 50% this year, to their highest level since March 2022.
Impact Of Breach
As per the company, the breach has caused no disruption to current operations so far and the refinery continues to operate like usual. No injuries or loss of livestock have been reported so far, but the overflow has impacted agricultural areas.
The company is currently working with the administration and local communities to address impacts. The news of the breach did however impact aluminium future prices on the London Metal Exchange, with prices rising as much as 3%. This rise was mainly caused due to the fact that the breach did initially weigh another potential supply disruption of alumina, in an already tight market.
Vedanta's Aluminium Business
Vedanta Aluminium is India's largest primary aluminium producers. The aluminium business' FY24 Ebitda stood at Rs 9,657 crore in FY24, which account's for 26% of Vedanta's consolidated Ebitda for the financial year.
The company has the largest aluminium installed capacity in India at 2.4 million tonnes per annum and has 45% market share in India, amongst the primary aluminium producers.
