Court paves way for Vedanta to source alumina from competitor Nalco

KOLKATA (miningweekly.com) – India’s Supreme Court has permitted Vedanta to bid for alumina from State-run National Aluminium Company Limited (Nalco) for the former’s bauxite starved smelters in the eastern state of Odisha.

Under the court order, Vedanta has been permitted to participate in Nalco’s alumina export tenders through any foreign affiliate of Vedanta and if the bids qualify, it could lift the intermediate and use it as raw material for its aluminium smelter in Odisha.

The order of the apex court comes in the wake of Nalco challenging a lower court order that had accepted Vedanta’s plea that since its smelter in Odisha was located in an ‘export-oriented zone’ it was eligible to participate in Nalco’s global export tenders for alumina and such sourced intermediate used for Vedanta’s local smelters.

A window to source alumina from Nalco is crucial for Vedanta’s aluminium smelter as it does not have bauxite sources locally and is dependent on securing bauxite from local miners or importing alumina. Supplies from Nalco would enable the Anil Agarwal-controlled Vedanta to push ahead with its brownfield expansion plans to lift aluminium smelting capacity by 30% to three-million tons a year.

Nalco, on the other hand, is a net exporter of alumina, exporting 1.24-million tons a year of its 2.28-million tons a year of intermediate production.

Nalco had been opposing sales of alumina to Vedanta on the grounds that its sales were only for exports against global tenders and tender papers were issued only to foreign entities and hence it had earlier disqualified a bid by Vedanta for 30 000 t of alumina.

The State-run aluminium producer had contended in the lower court that Vedanta could only participate it its export tenders if bids were submitted by foreign affiliate companies of Vedanta and no supplies could be made to domestic entities of the latter in violation of global tenders issued for exports.

Nalco in its submission to the lower court claimed Vedanta’s seeking alumina for its domestic smelter was “predatory as a competitor" and that "supplies to it would ensure unfair advantage to it as Vedanta already enjoyed tax and duty exemptions as it operated in an export oriented zone”. Vedanta, for its part, claimed bidding conditions laid down by Nalco were “discriminatory and arbitrary”.