Vedanta Resources Plc, the holding company of the Sterlite group companies, has announced its plans of setting up a greenfield aluminium smelter at Jharsuguda in Orissa.

The 5 lakh tpa smelter costing Rs.7,000 crore ($1.6 billlion) will be India's biggest aluminium smelter surpassing those of Nalco and Hindalco.

The project also envisages the setting up of a 1,000 MW captive coal-based thermal power plant. Alumina -- the key feedstock for aluminium -- will be sourced from Vedanta's upcoming Lanjigarh alumina refinery in Orissa.

The project will come in two phases with a total gestation period of 3-5 years. In Phase I, smelting capacity of 2.5 lakh tpa will be created along with associated power facilities. Phase II will complete the 5 lakh tpa capacity.

The project is part of Vedanta's vision of creating aluminium capacity of 1 million (10 lakh) tpa in India. Vedanta controls 3.5 lakh tpa (under creation) of Bharat Aluminium Co and 35,000 tpa of Madras Aluminium Co.