India’s state-run aluminium producer National Aluminium Company Limited (Nalco) has appealed an order by the Odisha High Court ordering it to allow privately-held metals firm Vedanta Ltd. from attempting to purchase surplus aluminium from it.
Nalco formally registered its appeal to the Supreme Court late last week, asking the judicial body to require London-based Vedanta to apply as a foreign buyer and not as a domestic purchaser. However, as Vedanta’s plant at Lanjigarh is situated within a special economic zone (SEZ), Vedanta says the plant’s location is sufficient reason to allow it to participate in the sale as a domestic entity.
To date, Vedanta has prevailed in state court on its claim. Last month’s opinion from the Odisha High Court noted the lack of economic sense requiring Vedanta to apply as a foreign firm would make.
“Because on one hand it refuses Vedanta to participate in the tender and on the other hand Nalco has allowed it to apply through a sister concern based in London and spend huge foreign exchange to transport it to London and back to its plant in the SEZ, it does find any favour with commercial sense.”
Vedanta maintains that Nalco’s position is also against the public interest, as it prevents Nalco from realizing maximum revenue from the sale of its alumina. Nalco enjoys a significant supply of the aluminium precursor by virtue of having its own bauxite mines, which it has due to its position as a state company. As a result, Nalco is among the world’s lowest-cost alumina refiners, allowing it to produce 2.153 million metric tons of the substance in the most recent fiscal year.
Conversely, Vedanta’s 1.6 million metric ton per annum aluminium smelter in Lanjigarh is entirely dependent upon alumina from third-party sources, which is a problem that has long bedeviled the plant.