Vedanta Aluminium buys L&T's bauxite mines for Rs 1,811 crore

Vedanta Aluminium, a subsidiary of London-listed Vedanta Resources, acquired a 24.5 percent stake for for Rs 200.70 crore in L&T-promoted Raykal Aluminium, that holds certain bauxite mining licenses in Orissa.

In phases, Vedanta will fully acquire Raykal Aluminium for Rs 1,811 crore. As per the filing made to the US Securities and Exchange Commission (SEC) on 31 May by its sister firm Sterlite Industries,the deal was signed on 23 February this year, two days before a group restructuring exercise was announced by its parent Vedanta Resources.

However, no announcement related to the deal has been made by the company to the Indian regulatory authorities so far. On 23 February , 2012, the company entered into a tripartite agreement with L&T and Raykal Aluminium stating that L&T holds certain prospecting licenses for bauxite mines located at Sijmali and Kurumali of Rayagad and Kalahandi districts of Orissa.

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[caption id="attachment_340285" align="alignleft" width="380" caption="The mines are also close to Vedanta Aluminium's plant site at Lanjigarh. Reuters"][/caption]

The acquisition would help Vedanta Aluminium in securing bauxite for its alumina refinery in Orissa's Lanjigarh, as the two mines are estimated to hold about 250-280 million tonnes of reserves.

The mines are also close to Vedanta Aluminium's plant site at Lanjigarh, where it operates 1 million tonnes per annnum (MTPA) capacity alumina refinery.

Of late, the company has been struggling to meet with the rising costs as it buys bauxite, a key raw material for making alumina, from the open market.

In 2011-12, it reported a net loss of Rs 2,618 crore as its cost of production had increased to about Rs 1.5 lakh per tonne in the last fiscal.

Besides, Vedanta Aluminum has been denied environmental clearances for expanding the refinery capacity to 5 MTPA and mining bauxite at nearby Niyamgiri hills with Orissa Mineral Development Corporation.

The L&T stock is up 0.23 percent to Rs 1286 on BSE.

PTI