Vedanta Faces $582M Demand from OMC After Court Rejects Bauxite Pricing Plea

 Vedanta Aluminium Ltd is facing a Rs 56 billion ($582 million) demand from Odisha Mining Corp (OMC) after the Orissa High Court rejected the company's plea seeking enforcement of an earlier bauxite pricing arrangement, Mint reported on October 5.

OMC, the state-owned mining company of Odisha, has issued a demand and intimation letter to Vedanta Aluminium, with the amount reportedly payable by October 31, 2026, according to two people familiar with the matter.

The dispute stems from an October 2004 agreement under which OMC was to supply Vedanta with 150 million mt of bauxite, with the price linked to the cost of extraction plus 50% royalty and other statutory dues. The High Court held that Vedanta could not seek to revive agreements that OMC had terminated in 2015 following changes to mining legislation. 

The court's ruling removes the interim protection previously available to Vedanta and allows OMC to take further action, including raising demands based on the average sale price methodology. This could result in materially higher bauxite procurement costs for Vedanta. 

Vedanta has filed a petition with the Supreme Court seeking a stay on the High Court order. The matter is scheduled to be heard on Friday.

The development could have implications for Vedanta's alumina and aluminium production costs, as the company currently has no operational bauxite mines. Its subsidiary Bharat Aluminium Co. Ltd. (BALCO) has emerged as the highest bidder for the Karlapat bauxite block in Odisha, offering a 175% auction premium, according to Mint. 

The Rs 56 billion demand is equivalent to about 40% of Vedanta Aluminium's FY2026 profit after tax of Rs 141.53 billion, highlighting the potential financial significance of the dispute.