Lanjigarh ban may spur Sterlite-Nalco alumina deal

Sterlite Industries is in talks with state-owned National Aluminium Company (Nalco) to source alumina for its Vedanta Aluminium plant.

The flagship company of Vedanta Resources Plc is also looking at importing alumina in order to ramp up the capacity of its Lanjigarh plant in Orissa to 2 million tonne (mt).

“Our first aim is to take the capacity to 1.2 mt this year and then, based on further approvals, we would like to ramp it up to 2 mt,” the company said in a conference call on Wednesday.

He said since bauxite mining is banned in Lanjigarh by the Union environment ministry, the company has no backward integration and is therefore talking to Nalco and some exporters for sourcing alumina.

Alumina is obtained from bauxite, which is further processed to make aluminium.

Roughly, it takes 2 tonne of alumina to manufacture 1 tonne of aluminium. Hence, for a 2 mt aluminium capacity, Sterlite would need 4 mt alumina.

Analysts felt sourcing alumina will not be difficult for the company.
However, the real benefit will come if it is able to source the required coal at reasonable prices both for Vedanta Aluminium and Sterlite Energy, which is the company’s commercial power generation arm.

Sterlite officials said the merger of Sesa Goa and Sterlite is on track and likely to be concluded by the end of this calendar year.
For thefinancial  year ended March, Sterlite reported a 35% rise in revenues at Rs40,967 crore, a 26% increase in operating profit at Rs10,169 crore and a 6% rise in net profit at Rs7,761 crore over the previous fiscal.