The Orissa High Court has dismissed Vedanta Aluminium's petition seeking bauxite supplies from Odisha Mining Corporation (OMC) at the historical rate of ₹1,000 per tonne, creating significant financial exposure for India's largest aluminium producer. According to reports from Mint, the ₹5,600 crore demand is equivalent to about 40% of Vedanta Aluminium's ₹14,153 crore profit after tax in FY26, highlighting the potential financial significance of the dispute. OMC has issued a demand and intimation letter to Vedanta Aluminium, with the amount payable by 31 October 2026. CLSA estimates the post-tax impact could be around $195 million, or 1.2% of Vedanta Aluminium's market capitalisation, while the one-time impact including interest could reach up to $290 million, equivalent to 2.8% of market cap.
The dispute stems from an October 2004 agreement under which Vedanta was to receive 150 million tonnes of bauxite at a price linked to the cost of extraction plus 50% royalty and other statutory dues. As reported by Mint, the petition was filed by undivided Vedanta Ltd in 2023, with the company arguing it had made substantial investments of about ₹1 lakh crore in Odisha over two decades based on state assurances of long-term bauxite availability and stable pricing. However, the court rejected this argument, noting that OMC had terminated the earlier joint-venture agreements in September 2015 following changes to the Mines and Minerals (Development and Regulation) Act.
Since April 2026, Vedanta Aluminium has started booking OMC bauxite at ₹3,000 per tonne, compared with the historical contract price of ₹1,000 per tonne and a market price of around ₹3,800 per tonne. According to CLSA, this represents a near-term increase of around $10 per tonne in aluminium production costs from first quarter FY27 levels. Vedanta's Bharat Aluminium Co. Ltd (BALCO) has emerged as the highest bidder for the Karlapat bauxite block in Odisha, offering a 175% auction premium, which was the highest premium offered for a bauxite block auction in India. CLSA notes that even at the revised price, OMC's bauxite remains around $10 per tonne cheaper than alternative domestic sources and $20-$30 per tonne cheaper than imports on a landed basis.
Vedanta Aluminium produced around 2.9 million tonnes of alumina in FY26, with 25% of its bauxite sourced from OMC, 25% from other domestic sources and the remaining 50% imported, largely from Guinea. CLSA estimates that OMC is close to securing approvals to increase its bauxite production capacity to 6 million tonnes per annum (MTPA). The brokerage suggests that Vedanta's Lanjigarh refinery could potentially source more bauxite from OMC, which could improve the company's bauxite mix and alumina production. Vedanta is currently reviewing the judgment and evaluating next steps, including legal options, as the ruling has removed interim protection that the company had enjoyed during litigation.
