Mumbai: Vedanta, the largest aluminium producer in India, will soon become the lowest cost producer of the silver-white metal in the world as the company works on backward integration of its supply chain, including acquisition of more coal mines, according to John Slaven, the chief executive of the company’s aluminium business.
The company also has firm plans of expanding its production capacity to 3 million tonnes (MT) a year from 2.4 MT at present in 18-24 months. It is also working on expanding capacity “significantly beyond that,” Slaven said.
“Today, Vedanta Aluminium is in the first decile on the global cost curve, and as we complete the backward integration, it really puts us in the absolutely lowest cost position in the world,” Slaven told Mint. During the October-December quarter, Vedanta’s cost of aluminium production came down by 20% from a year ago to $1,735 per tonne, he added.
“This is a cash engine, and we will increasingly become more of a cash engine as we move forward,” he said.
The company has two aluminium smelters—one each in Odisha and Chhattisgarh. While the former produces 600,000 tonnes a year, the latter produces 1.8 MT.
The company also has a 2 MT a year alumina refinery at Lanjigarh in Odisha that feeds its two smelters. It is working on expanding refinery capacity to 6 MT, which will make it self-sufficient for smelting 3 MT of aluminium, Slaven said, helping further lower its costs.
The company is also working on ramping up the mining of bauxite and coal, Slaven said. Bauxite is the ore from which aluminium is extracted. The company is looking to acquire more mines that would allow it to expand beyond 3 MT a year of refined metal production, he said. This will reduce the comp-any’s reliance on open market for these raw materials, further improving its cost efficiencies.
Vedanta’s aluminium operations are concentrated in eastern India in Odisha and Jharkhand with easy access to ports in Odisha and Andhra Pradesh, helping the company reduce its logistics overheads. Slaven, who has worked at US’ Alcoa and Australia’s BHP, ter-med these assets as the most unique in terms of their proximity to raw materials and having a tightly knit supply chain.
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Published: 12 Feb 2024, 10:27 PM IST