Vedanta says considering layoffs at Odisha plant

A bird flies by the Vedanta office building in Mumbai August 16, 2010.

BHUBANESWAR (Reuters) - Vedanta Aluminium Ltd (VAL), India's largest aluminium maker, is considering layoffs within two months at its alumina refinery in Odisha as hopes of an immediate revival of the plant fade, the president of the company said.

VAL, a unit of London-listed Vedanta Resources (VED.L), has about 550 employees. It closed down the 1-million-tonne per year refinery exactly two weeks ago due to a shortage of bauxite, the key raw material used to produce alumina.

India, the world's fifth-biggest bauxite producer, has been limiting the issue of bauxite leases mainly because of local protests over land acquisition.

"We don't know how long this crisis will continue. We don't have any other choice left but to retrench staff," VAL President Mukesh Kumar told Reuters.

"It could be 10 or 100 by January-February depending on the situation," Kumar said.

About 75 employees, including engineers and executives, have already left the refinery, at Lanjigarh in Kalahandi district, about 450 kilometres from state capital Bhubaneswar, in the past three months, while many more are scouting for opportunities.

The Lanjigarh plant has faced bauxite shortages since its commissioning in August 2007, after a supply arrangement with a state agency to source from the nearby Niyamgiri hills ran afoul with the federal environment and forest ministry and got mired in litigation.

The refinery requires 10,000 tonnes of bauxite a day to operate at full capacity.

Vedanta says the plant is designed for local bauxite and only this can ensure its sustainability.

(Reporting by Jatindra Dash; editing by Malini Menon and G.Ram Mohan)