The Indian aluminium producer has been forced to source bauxite from other Indian states following a decision by the India's Union Ministry of Environment and Forest to deny the company access to bauxite deposits in the Niyamgiri Hills.
However, as sourcing from other states becomes increasingly difficult, there's a very real risk that the company might have to shut down, albeit temporarily.
The Lanjigarh plant relies upon a monthly supply of 300kt of bauxite, but due to a mining lease expiry at Vedanta's major mine in the adjacent state of Chhattisgarh (which supplied 120kt of bauxite) and weather-related issues affecting a smaller mine in the same state, the situation is looking decidedly unsteady.
Add a reluctance on behalf of privately owned mines to supply domestic markets and regulatory issues affecing mines in Jharkhand and Andhra Pradesh and Vedanta could find itself in a very difficult position.
A Vedanta official said there was no pressure from shareholders for the company to close its Odisha refinery.
In the past, when dealing with bauxite shortages, and bearing in mind that the company has always relied upon externally-sourced bauxite, Vedanta has taken it on the nose, incurring financial losses in the region of Rs.3,000 crore.
Aware of what is at stake if the plant should close, Vedanta has stressed that it cannot be allowed to happen. The company employs 7,000 both directly and indirectly and is currently running its smelter by importing alumina.