Vedanta alumina output unaffected after water breach

Aluminum futures earlier rose as much as 3% on the London Metal Exchange after reports about the incident as investors weighed another potential supply disruption of the crucial raw material in an already tight market.

Alumina, an intermediate product processed from bauxite that is fed into smelters to make aluminum, has proved to be a particularly vulnerable corner of the global commodity supply chain in recent years, having been impacted by everything from sanctions on Russia’s top producer — which were later lifted — to disruptions at key refineries.

The water storage facility was breached after unprecedented rainfall in the area, Vedanta said. There have been no injuries to humans or loss of livestock reported but the overflow has affected agricultural areas. The company said it is working with the administration and local communities to address impacts.

“There is no disruption in our current operations and the refinery continues to operate in compliance with regulatory requirements,” the spokesman said. “Additionally, there is no damage to our red mud storage facility. The situation is fully under control.”

Alumina supply and prices have become a growing focus for alumina producers, as rising costs put pressure on smelters’ margins. Alumina has risen about 50% this year, to the highest since March 2022, driven by production disruptions and rising demand from aluminum smelters.

Aluminum closed at a price of $2,528.50 a ton, gaining 2.33% on the day.

(By Sana Pashankar)