Vedanta's aluminium arm is one of the country's largest producers of the metal and operates the refinery, which has a capacity of one million tonnes per annum (MTPA).
Vedanta Aluminium on Thursday said it has started the closure process of one of its production stream, which will lead to the Lanjigarh facility's output declining to half and impacting up to 2,000 jobs.
The mining conglomerate on Thursday said that the collapse in aluminium prices and lack of bauxite availability from Odisha had forced it to opt for a gradual closure of its Lanjigarh facility in the state.
"It is a gradual closure. With no visibility in terms of bauxite linkage, volatility in global metal prices and sharp fall in aluminium rates, we are pained to take this decision for the Lanjigarh facility," Vedanta Aluminium CEO Abhijit Pati told PTI.
The company has started the process of partial closure and is closing one of the two streams, which will lead to a drop in the plant's production capacity by about half.
"This closure will take about two months and if such a situation persists then we will be forced to shut down the second stream as well, but I'm hoping that something can happen in the meanwhile," Pati said.
Vedanta's aluminium arm is one of the country's largest producers of the metal and operates the refinery, which has a capacity of one million tonnes per annum (MTPA).
On impact of the shutdown on jobs, Pati said it "will impact about 2,000 jobs, both direct and indirect." Vedanta Aluminium's Lanjigarh plant provides direct employment to 2,000 people and indirect to another 8,000.
Pati urged the government to take a serious note of the issues facing the aluminium industry in the country.
"It is not only about taking decision, but also about taking when when the time is right. Here time is of essence," he added.
In a BSE filing, the Anil Agarwal-led firm said, "While we continue to do our best to sustain the operations, we are severely constrained by this excessive cost burden on our Lanjigarh operations, but seem to be left with no choice to implement a gradual closure."
Aluminium prices globally have collapsed in the past few months and the current indications are that this trend will continue, the filing added.
"Our Lanjigarh operations have additionally been affected by the non-availability of bauxite from within the state of Odisha. As a result, our cost of production is significantly higher and is impacting the viability of our Lanjigarh operations," Vedanta said.
Vedanta shares rose by 6.55% to settle at Rs 91.15 apiece on BSE.
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