Vedanta drags Nalco to HC over purchase denial

Faced with raw material crunch to run its aluminium plant in Odisha, Vedanta has sought the court’s intervention to buy alumina from public sector firm National Aluminium Company (Nalco), which is currently exporting surplus production even as domestic aluminium makers are reeling from shortage of alumina.

In a writ petition filed in the Orissa High Court, Vedanta has asked the court to direct Nalco to consider its bid for the purchase of alumina. It has also urged the court that pending disposal of the case, sale of alumina by the state-owned company be stayed. Vedanta went to court after being repeatedly denied the chance to participate in the tender floated by Nalco for the sale of surplus alumina. Nalco, after meeting its in-house requirements, exports over 1.2 million tonnes of alumina annually.

Vedanta’s bid to participate in the tender was rejected on the eligibility ground, which restricts the sale of alumina to only overseas buyers that are registered with Nalco.

The petition said that Vedanta was advised by Nalco to register its holding company Vedanta Resources Plc, London, to be permitted to participate in the tender for the purchase of alumina. Then, it could take it to the high seas and sell the material to its Indian arm for it to the state.

This advice was rebuked by Vedanta, which said: “Such a process is impractical and unfeasible given it involves substantial loss of foreign exchange as well as duplication, and unnecessary burden on the country’s infrastructure of road, rail and port.”

On the other hand, the Anil Agarwal-owned company has argued that the SEZ status of its 1.25 million tonnes per annum capacity smelter at Jharsuguda in Odisha makes it eligible to participate in the tender of Nalco, for export of alumina.

“Government policy treats SEZs as deemed foreign territory, and sales to SEZ units are treated as exports. All benefits under the Foreign Trade Policy are applicable on transactions with SEZ units,” the petition said, pointing out that when other public sector undertakings like Hindustan Copper are allowing Indian firms along with foreign buyers to participate in the sale of metal intermediates, why was the same principle not followed by Nalco.

At the ‘Make in Odisha’ conclave in 2016, the then Union mines minister Piyush Goyal, during an address, had wondered how Nalco was exporting alumina rather than allowing for its conversion within the country, and expressed dismay over “bullying by vested interests”.

Vedanta’s petition also stated that in the latest tender floated on February 1, Nalco had finalised the sale bid at less than $380 per tonne of alumina, while Vedanta had quoted a price of $380 per tonne ex-Damanjodi (Nalco’s plant site)/ Vizag port basis. It further said that the sale of surplus alumina to Vedanta would generate extra revenue of ~200 crore for Nalco annually, over and above its export realisation.

Vedanta has set up an aluminium SEZ unit with 1.25 million tonnes capacity and a cost of ~12,000 crore at Jharsuguda, which formed the major part of the company’s 1.6-milliontonne smelting capacity at the location. The unit intended to use alumina from Vedanta’s Lanjigarh refinery to produce aluminium. But with the Lanjigarh plant unable to run at full capacity due to bauxite crunch — following the denial of Niyamgiri on grounds of ecology and tribal protests — the firm’s Jharsuguda smelter is forced to import alumina from countries like Australia, Indonesia, Vietnam and China, even to operate the plant at a reduced capacity.