Nalco declines alumina supply to Vedanta

Aluminium major Nalco has declined to supply a trial amount of alumina to Vedanta Aluminium, triggering a controversy here.

It agreed to supply 53 tonnes of alumina to Vedanta smelter, in the district headquarters town of Jharsuguda, about six months ago. It had also received an amount of about Rs. 1.5 million from Vedanta.

The move was seen as Nalco's renewed relationship with its private sector rival. But it came as surprise, when Chairman and Managing Director Ansuman Das said his company would not sell alumina within India.

Speaking to reporters here Friday, he said the board of his company decided not to supply alumina to other companies in the domestic market.

An industry expert said he was astonished by Nalco's latest move. When Nalco was fully aware, that it cannot supply alumina to any domestic private company, than how did it agree to supply a trial amount, he asked.

"Was the decision to supply trial amount of alumina arbitrarily taken by some officials, without doing proper ground work, and without taking the board into confidence?" he pointed out.

Vedanta has set up a one million tonne per annum alumina refinery at Lanjigarh in Kalahandi district, about 600 km from here to feed its smelter at the district  headquarters town of Jharsuguda.

However, it could never operate the refinery plant at full capacity due to shortage of bauxite, the key raw material used to produce alumina. It also shut down the refinery  several times in the past.

A senior Vedanta official said this has reduced availability of alumina for its smelter plants. Alumina is the main raw material used to produce aluminium.

He said the company offered $45-50 per tonne, which is above Nalco's export price.
Vedanta has sought alumina from Nalco previously as well. About four years ago, Balco, another company of Vedanta group also made a similar request to Nalco.

Although Nalco agreed to supply nearly 2000 tonnes of alumina, and dispatched a part of assured quantity by road, it scrapped the deal midway due to protests by Nalco workers union.

Vedanta again approached Nalco to supply alumina, this time for its smelter in Jharsuguda. Nalco agreed to the proposal this year, and received a payment to supply a trial amount.

Nalco management also subsequently sought an endorsement of the decision from its committee of  directors. However, the committee rejected the decision again, following the protests by Nalco workers union.