Nalco filed a special leave petition in the Supreme Court on Tuesday seeking to stay an Orissa High Court order that permitted Vedanta’s unit in the Jharsuguda special economic zone (SEZ) to participate in a Nalco tender for sale of 1.2mn mt/yr surplus calcina alumina, in March 2019.
The dispute arose when Vedanta sought to participate in Nalco’s tender as an overseas customer. Following a disqualification by Nalco, Vedanta filed a petition in court. Vedanta’s overseas bidder status is based on its location in SEZ, qualifying it as a “territory outside India”. Nalco claims SEZ unit qualifies as a foreign entity for customs purposes only and does not qualify it as an overseas customer.
State-owned Nalco is India’s leading aluminium producers. The company needs to ship 30,000mt of alumina, after internal use, at an interval of 10 days to prevent its 36,000mt silo from overflowing.
With the tender in court, and the extra alumina on hand, the plant would need to stop production and cause a huge loss of income and reputation. This would also provide a competitive advantage to its rival Vedanta.
Nalco’s petition claimed that Vedanta went to court to safeguard its own commercial interest since its aluminium refineries are not able to supply an adequate amount of alumina to its Jharsuguda aluminium smelter plant with 0.5mn mt/yr capacity.
Vedanta stands to benefit from buying calcina alumina from Nalco instead of importing raw material and incurring additional freight cost.