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Vedanta – What a Load of Bull-xite

Author: Published on: Published in: Vedanta (NSE:VEDL)

September 9, 2025 – Vedanta Limited’s (NSE:VEDL) alumina business, anchored by the Lanjigarh refinery in Odisha, has operated sub-optimally due to the Company’s failure to secure a captive local bauxite supply.

  • VEDL’s aluminium operations have operated without a captive bauxite supply for over 15 years, instead relying on expensive and unreliable third-party sources.
  • Production at the Lanjigarh bauxite refinery has stalled, while the cost of production has increased. This has eroded margins and exposed the segment to input price and supply volatility.
  • VEDL has invested heavily in Lanjigarh, but without a secure bauxite source, these expansions will only exacerbate existing weaknesses.
  • The Sijimali mine is positioned as the solution, but the project remains stalled at the first stage of clearance.
    • Protests against the mine by locals and tribals have intensified, with reports of police action, detentions, and alleged use of force against tribal activists opposing the project.
    • Allegations of fraudulent consent have been filed in the Orissa High Court, claiming that signatures submitted in support of the project were forged.
    • Multiple villages have since passed fresh resolutions rejecting the mine, raising questions over the legitimacy of earlier Gram Sabha approvals.
    • The project area includes forest and tribal land, governed by the Forest Rights Act, placing strong legal emphasis on community consent and procedural compliance.
    • Civil society groups and tribal leaders have publicly condemned the project, accusing state authorities and Vedanta of coercion and procedural violations.
  • In September 2025, the Union Environment Ministry deferred Stage 1 forest clearance for the Sijimali mine, citing unresolved issues with community consent and procedural gaps in the state’s application.
  • Sijimali is expected to supply 9 to 12 million tonnes of bauxite per annum, but the expanded refinery will require 18 million tonnes per annum. VEDL will remain exposed even in a best-case scenario.
  • In January 2023, management guided toward production at Sijimali in Q3 FY25, a target that has now been pushed back 15 months to Q4 FY26. The Environment Ministry’s deferral makes even the revised timeline impossible.
  • Analyst models have parroted company guidance, projecting 1 – 1.5 million tonnes of bauxite from Sijimali in FY26 despite multiple warning signs, public filings, court documents and regulatory delays.

Sell-side analysts identified two potential catalysts for VEDL in FY26: the start of bauxite production at Sijimali and the group demerger. As of September 2025, both have slipped their timelines and seem increasingly unlikely to occur this year. This is effectively a profit warning.

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