The London listed Vedanta has entered into a tripartite agreement with L&T and its partner Dubai Aluminium Company to buy them out from their aluminium venture in Odisha, called Raykal Aluminium. Raykal was the SPV floated by the two partners.

Vedanta had entered into an agreement with L&T and Dubal on February 23 this year, but the disclosures were revealed only last week.

In a filing with the US regulator SEC, Vedanta has said it has already acquired 24.5% stake in Raykal for INR 200.70 crore and has the right to acquire the entire 100% over a period of time for a total consideration of INR 1,811 crore subject to certain milestones being achieved.

Since 1993, L&T has been sitting on two to three prospecting licences for bauxite mines in Sijmali and Kurumali of Rayagad and Kalahandi districts in Odisha. Under the original agreement, the entire bauxite excavated from these mines was to be used by Raykal for its own proposed alumina refinery and smelter project in the state. But with the project not taking off due to various reasons, Dubal walked out of the venture and will now be replaced by Vedanta Aluminium.

According to the Directory of Geology in Odisha, the two mines are estimated to have 250 million tonne to 280 million tonnes of bauxite reserves, good enough to take care of VAL’s current requirement for 50 to 90 years. Such a long term bauxite supply agreement is bound to give Vedanta’s Lanjigargh project a much needed lifeline.

VAL has an ambitious plan of integrated aluminium facilities including an operating alumina refinery at Lanjigarh and an aluminium smelter at Jharsuguda.

Source - Business Standard

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