Declining alumina cost helps Vedanta set eyes upon higher aluminium output

Global mining and metals behemoth Vedanta is eyeing 1.6 million tonnes (mt) of aluminium output for the financial year 2017-18, encouraged by the falling alumina prices and a resilient LME aluminium. The company ended the last financial year with a record production of 1.2 MT primary metal.

Overall cost of production for the aluminium producer was down by seven per cent to US$1,463 per tonne, thanks to volume ramp-up, cost-saving initiatives, INR appreciation and of course, lower alumina cost, the company said in its annual production report.

Vedanta has set an average aluminium CoP target of US$1,475-1,500 per tonne for the current financial year. The full capacity ramp-up of its second aluminium smelter at Balco (Bharat Aluminium Company), ramp-up of the balance pot lines at its 1.25-mt-per-year Jharsuguda smelter, securing continuous bauxite supply through a strengthened supply chain, expanding Lanjigarh alumina refinery's capacity to 4 MT per annum, and optimising other raw material sourcing costs would ideally help the company achieve the target by 31st March, 2018.

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Vedanta's total alumina output during FY 2016-17 reached 1.2 MT, up 24 per cent from the previous year. Alumina CoP for the entire year was recorded at US$282 per tonne, down 10.6 per cent year-on-year. The Lanjigarh alumina refinery with a nameplate capacity of 4 MT per annum alumina, now has a de-bottlenecked capacity of 1.7-2 MT per annum.

According to a company source, “Vedanta was able to cut alumina production cost by operating both streams of its Lanjigarh refinery, lower bauxite cost driven by higher quality bauxite, operating efficiencies and rupee depreciation.”