After stopping aluminium production at Korba in Chhattisgarh, Anil Agarwal-owned Vedanta is preparing the ground to suspend production at Lanjigarh in Odisha due to rising cost and falling aluminium prices.

The Lanjigarh unit has a capacity to produce five million tonnes of alumina from bauxite. It is then fed into two aluminium smelters at Jharsuguda in Odisha.

The company has two more aluminium smelting (producing) units at Korba which were shut recently. In all, the company has aluminium production capacity of one million tonnes.

Aluminium prices the world over have collapsed in the past few months and indications are that this trend will continue, said the company in a statement on Thursday.

“Our Lanjigarh operations have been affected due to non-availability of bauxite within Odisha. As a result, our cost of production is significantly higher and is impacting the viability of Lanjigarh operations,” it said.

The company said that while it continued to do its best to sustain the operations, it was constrained by excessive cost burden at the Lanjigarh plant and was left with no choice but to implement a gradual closure.

The company needs 3--3.5 tonnes of bauxite to produce a tonne of alumina. For producing one tonne of aluminium, it requires two tonnes of alumina.

Therefore, Vedanta requires 3.5 million tonnes of bauxite, of which its current secured availability from domestic sources is about 1.5 million tonnes.

The recent depreciation of rupee against dollar has made import of raw material such as bauxite and coal costlier.

The yuan depreciation and slowdown in Chinese economy is another major concern for aluminium companies in India. China consumes 40-50 per cent of the world's steel, aluminium, copper and other metals.

In order to reduce its reliance on imports for aluminium, China has put up huge aluminium plants near its coal deposits in the northern part of the country.

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