Sterlite Industries (India) Limited - Sterlite Industries India Ltd.

Vedanta Aluminium
Overview
We hold a 29.5% ownership interest in Vedanta Aluminium. The other 70.5% of Vedanta Aluminium is owned by Vedanta. Vedanta
Aluminium is not part of our consolidated group of companies.
In October 2004, Vedanta Aluminium entered into an agreement with the Orissa Mining Corporation Limited, or OMC, regarding the
establishment of the alumina refinery, an aluminum smelter and associated captive power plants in the Lanjigarh and Jharsuguda districts.
Projects and Developments
Lanjigarh Alumina Refinery
Vedanta Aluminium has entered into an agreement with Orissa Mining Corporation Ltd, or OMC, regarding the establishment of an alumina
refinery, an aluminum smelter and an associated captive power plant in the Lanjigarh district, which is located approximately 450 kilometres
from BALCO’s Korba facility. In November 2007, the Supreme Court of India directed that we enter into an arrangement with OMC to operate
the bauxite mines in place of Vedanta Aluminium. As such, subject to the OMC obtaining a mining lease for the Lanjigarh bauxite mines,
OMC and we have agreed to set up a joint venture company to operate the mines. It is proposed that OMC will own 26% of the joint venture
company and we will own the remaining 74%. See “Item 8. Financial Information — A. Consolidated Statements and Other Financial
Information — Legal Proceedings — Petitions have been filed in the Supreme Court of India and the High Court of Orissa to seek the cessation
of construction of Vedanta Aluminium’s refinery in Lanjigarh and related mining operations in Niyamgiri Hills.”
Vedanta Aluminium is intended to be a fully integrated alumina and aluminum producer with a 1.0 million tpa greenfield alumina refinery
and an associated 75 MW captive power plant, expandable to 1.4 million tpa and 90 MW, respectively, subject to governmental approvals, at
Lanjigarh, in the State of Orissa in Eastern India. The refinery will be completed in two phases of 700,000 tpa each. In March 2007, Vedanta
Aluminium began the progressive commissioning of the 1.0 million tpa greenfield alumina refinery. The refinery started production from a
single stream operation and produced 585,597 tons of alumina in fiscal 2009. The second production stream of the Lanjigarh alumina refinery
was commissioned in April 2009. The estimated cost of the project is Rs. 44,000 million ($864.9 million). As of March 31, 2009,
Rs. 34,372 million ($675.7 million) has been spent.
In addition, Vedanta Aluminium is investing an estimated Rs. 68,800 million ($1,352.5 million) to expand its alumina refining capacity at
Lanjigarh to 5.0 million tpa by increasing the capacity of the current alumina refinery from 1.4 million tpa to 2.0 million tpa by March 2010
through debottlenecking and by constructing a second 3.0 million tpa alumina refinery and an associated 210 MW captive power plant. The 3.0
million tpa refinery and an associated 210 MW captive power plant are expected to be commissioned by mid-2011. Vedanta Aluminium has
entered into contracts with suppliers for a majority of the equipment and machinery to construct the new refinery and is in the process of
obtaining all governmental approvals for the project. As of March 31, 2009, Rs. 6,773 million ($133.1 million) has been spent on the project.
On August 8, 2008, the Supreme Court of India granted us clearance for our forest diversion proposal for the conversion of 660,749 hectares
of forest land from forestry use to mining use, allowing us to source bauxite which has been mined on the Niyamgiri Hills in Lanjigarh.
Pursuant to the Supreme Court order, we were required to pay the higher of 5% of annual profits before tax and interest from the Lanjigarh
project and Rs. 100 million per annum (commencing April 2007), as a contribution for scheduled area development, as well as Rs. 122 million
towards tribal development and Rs. 1,055.3 million plus expenses towards a wildlife management plan for conservation and the management of
wildlife around the Lanjigarh bauxite mine. As of March 23, 2009, an amount of Rs. 1,211.8 million has been remitted to Compensatory
Afforestation Fund and Rs. 200 million has been deposited with OMC in compliance with the Supreme Court order. On December 11, 2008,
the Ministry of Environment and Forests, or MoEF, granted in-principal approval under the Forest (Conservation) Act, 1980, or the Forest Act,
and we are currently in the process of complying with the conditions specified in the MoEF’s approval. On April 28, 2009, the MoEF granted
us environmental clearance for the mining of bauxite. We expect to receive bauxite mined from the Niyamgiri Hills via a conveyor by mid-
2010.
Jharsuguda Aluminum Smelter
500,000 tpa Aluminum Smelter
Vedanta Aluminium is investing an estimated Rs. 95,583 million ($1,879.0 million) in the Jharsuguda project, which involves the setting up
of a greenfield 500,000 tpa aluminum smelter, together with an associated thermal coal-based 1,215 MW captive power plant, in Jharsuguda,
Orissa in India. Vedanta Aluminium has obtained funding for the entire estimated cost of the project. As of March 31, 2009, Rs. 80,999 million
($1,592.3 million) has been spent on the project. We have received environmental approvals for the project. Commissioning of the first phase
commenced in May 2008, six months ahead of schedule, and was fully commissioned in May 2009. Vedanta Aluminium produced 82,030 tons
of aluminum from the first phase in fiscal 2009. The second phase is expected to be progressively commissioned from June 2009 through the
end of fiscal 2010, subject to the receipt of governmental approvals. The associated thermal coal-based captive power plant will consist of nine
units of 135 MW each, five of which have been commissioned as part of the first phase. The commissioning of the captive power plant units is
scheduled to meet the power requirements of the new Jharsuguda smelter and all other power requirements of the facility.
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