The London Stock Exchange-listed Vedanta Resources will invest Rs 7,000 crore (Rs 70 billion) to set up a 500,000 tonne per annum aluminium smelter at Jharsuguda in Orissa.
Vedanta already has an ongoing alumina refinery project -- Vedanta Alumina -- at Lanjigarh in Orissa, at an investment of $800 million (Rs 3,600 crore). It proposes to set up a 5 million tonne per annum steel plant in Orissa, at an estimated investment of Rs 12,500 crore (Rs 125 billion).
Speaking at a media conference in Mumbai on Thursday, Anil Agarwal, founder and chief executive officer of Vedanta Resources, said: "This is a major step towards our long term vision of creating a one million tonne aluminium capacity. The aluminium project will be set up in two phases of 250,000 tonne each, along with a 1000 mw captive power plant."
The company has already initiated the project development work, including land acquisition, feasibility studies and obtaining government approvals, he added.
Vedanta Resources, after completing this aluminium project, will be the 8th largest company in the global aluminium industry. It will surpass National Aluminium Company to become the largest aluminium player in India.
"The aluminium produced in this new smelter will mainly be exported. However, a lot depends on the domestic demand scenario," Agarwal said.
The group will use a mixture of internal accruals and debt to fund this project. "We will have enough internal resources to fund this project. However, if need be, we are in a very comfortable position to borrow from the market," Agarwal said.
The company's ongoing 1.4 million tonne per annum Lanjigarh alumina project is 45 per cent complete.
"The alumina produced at Vedanta Alumina will be utilised for the increased capacity at Bharat Aluminium Company and this (Jharsugdha) aluminium project."
The company is in the process of setting up a greenfield smelter at Balco's unit at Korba, which would take Balco's total capacity to over 360,000 tonne per annum. The expansion project is expected to be completed by March 2006.