Home ECONOMY Row over Nalco refusal to sell alumina to Vedanta

Row over Nalco refusal to sell alumina to Vedanta


OST Business Bureau

New Delhi /Bhubaneswar, Sept 30:

Public sector giant Nalco’s refusal to honour the promise it made to Vedanta Aluminium Ltd (VAL) for supply of ‘trial amount’ of alumina has triggered a controversy.


Six months ago, Nalco had agreed to supply 53 tonnes of alumina to the Vedanta’s smelter in Jharsuguda and had also received an amount of about Rs. 15 lakh from the company. The move was widely seen as Nalco mending its relationship with its private sector rival.

But it came as surprise when NALCO chairman and managing director (CMD) Ansuman Das said on Friday that his company would not sell alumina within India. Speaking to reporters here, he said the board of his company had decided in principle not to supply alumina to other companies in the domestic market.

An industry expert expressed surprise at the Nalco volte face. “When Nalco was fully aware that it cannot supply alumina to any domestic private company,how did it agree to supply a trial amount in the first place?” he asked. “Was the decision to supply trial amount of alumina taken arbitrarily by some officials without doing proper ground work and without taking the board into confidence?” he wondered.

The decision to supply alumina to Vedanta was taken by the commercial department of Nalco, of which the present Nalco chairman is the director.
Questions are being raised on why his department accepted the payment from Vedanta without discussing the matter in the board of directors.

Vedanta has set up a one million tonne per annum alumina refinery at Lanjigarh in Kalahandi district, about 600 km from here to feed its smelter at the district headquarters town of Jharsuguda. But it has not been able to operate the refinery plant at full capacity due to shortage of bauxite, the key raw material used to produce alumina. The company has had to shut the refinery several times in the past.

A senior official of the VAL said this had reduced availability of alumina, the intermediate product that goes into the making of aluminium, for its smelter plant. He said VAL had offered to pay $45-50 above the Nalco’s export price per tonne of alumina.

Incidentally, it was not for the first time Vedanta was seeking alumina from Nalco. About four years ago, Balco, another company of the Vedanta group, had also made a similar request to Nalco.

Although Nalco had agreed to supply nearly 2000 tonnes of alumina and had already dispatched a part of the assured quantity by road, it had to scrap the deal midway due to protests by Nalco workers’ union.

Vedanta approached Nalco for supply of alumina last year: this time for its smelter in Jharsuguda. The latter agreed to the request this year and duly received the payment to supply a trial amount.

The Nalco management subsequently sought an endorsement of the decision from its committee of directors. However the committee rejected it following protests by Nalco workers’ union.