Vedanta sees Aluminium costs falling below $1,700/t in H2FY26 as Sijimali bauxite mine nears approval

Vedanta Ltd told investors last week that it expects the cash cost of producing primary aluminium to slide beneath US $1,700 per tonne in the second half of FY 2026, supported by higher captive alumina output from its Lanjigarh refinery and the impending start-up of the Sijimali bauxite mine in Odisha.

“With Train II at Lanjigarh fully ramping and Sijimali contributing up to 1.5 million tonnes of bauxite, we are set for sub-$1,700 hot-metal costs,” Chief Operating Officer Anup Agarwal said on the company’s Q1 earnings call.

Bauxite: Sijimali heads for Q4 start

The Forest Advisory Committee signed off Sijimali’s first-stage clearance (FC-1) on 30 July. Management expects to complete the FC-2 and environmental (EC) approvals “within three to four months,” paving the way for mining to begin by the end of Q4 2026. The pit should supply 1.0–1.5 Mt of ore this year.

Exports from Emirates Global Aluminium’s Guinea unit remain suspended, but the company said the gap has been covered by other contracts. For the full year, Vedanta has already locked in the ~9 Mt of bauxite it needs to feed its alumina refineries:

Alumina: Train II lifts captive mix to 65-70 %

Lanjigarh produced 584 kt of alumina in Q1 FY26 and remains on track for 3.0–3.1 Mt this fiscal year. The full ramp-up of Train II will lift Vedanta’s captive-alumina share from roughly 50 % to 65-70 %, pushing refinery cash costs below US $800 /t. Together with softer third-party alumina prices, management expects an additional US $80–100 /t savings over the next two quarters.

The plant currently operates at about 3.5 Mt /y. Management’s first milestone is to stabilise output at 5 Mt /y; once that level is reached, an 18-month debottlenecking campaign—focused on upgrading kilns, calciners, material-handling systems and outbound logistics (rail, port and other evacuation links)—will raise nameplate capacity to 6 Mt /y. The company still targets mechanical completion for this second-phase upgrade in the back half of FY27.

Primary aluminium: cost floor and capacity creep

Vedanta’s Q1 hot-metal cash cost fell 12 % quarter-on-quarter to US $1,765 /t on cheaper alumina and a higher captive mix. While planned maintenance at the Jharsuguda power plant will curb further gains in Q2, the company reaffirmed its full-year guidance of US $1,700–1,750 /t, aiming for the lower end in H2. Power costs are already “close to US $500 /t,” COO Anup Agarwal noted.

On the capacity side, the group is installing magnetic compensation loops in potlines at Jharsuguda and BALCO—a technology that boosts current efficiency and metal throughput. The retrofit underpins Vedanta’s plan to lift smelter capacity to 2.8–2.85 Mt within the next 18 months. And the target production for FY26 is 2.5-2.6 Mt.

Additionally, the company confirmed that the commissioning of the expansion of 435,000 tons per annum Balco smelter is targeted in the current quarter.