Mumbai, Oct. 6 -- Vedanta Aluminium Ltd is facing a Rs.5,600 crore demand from Odisha Mining Corp. (OMC), after the Orissa High Court rejected its plea to retain an old pricing arrangement for bauxite. The setback could raise costs for the country's largest aluminium producer and increase its future raw material costs. OMC has issued a demand and intimation letter to Vedanta Aluminium, with the amount payable by 31 October 2026, according to two people familiar with the matter who spoke on the condition of anonymity as the details are private. The demand follows the Orissa High Court's dismissal of Vedanta Ltd's petition seeking enforcement of a 2004 agreement under which OMC was to supply 150 million tonnes of bauxite at a price linked to the cost of production and royalty. The court held that Vedanta could not seek to revive agreements that had been terminated and had become unworkable following changes in mining law. The Rs.5,600 crore demand is equivalent to about 40% of Vedanta Aluminium's Rs.14,153 crore profit after tax in FY26, underscoring the potential financial significance of the dispute. The immediate focus is now on the Supreme Court. Vedanta is seeking a stay on the high court order, with the matter scheduled to come up for hearing on Friday, people familiar with the matter said. The Supreme Court's website shows that Vedanta filed the petition on 5 October. The high court ruling has already removed the interim protection that Vedanta had enjoyed during the litigation and allowed OMC to take further action in accordance with law, including raising demands based on the average sale price methodology. Vedanta and OMC did not immediately respond to Mint's queries. The dispute dates back to an October 2004 agreement under which Vedanta was to receive 150 million tonnes of bauxite, with the price linked to the cost of extraction plus 50% royalty and other statutory dues. The petition was filed by undivided Vedanta Ltd. in 2023. Vedanta argued that it had made substantial investments in Odisha based on the state's assurances of long-term bauxite availability and stable pricing. The company has said in court filings that it invested about Rs.1 lakh crore in Odisha over two decades. The court rejected the argument, noting that OMC had terminated the earlier joint-venture agreements in September 2015 following changes to the Mines and Minerals (Development and Regulation) Act. Vedanta did not challenge the termination at the time, and it had therefore attained finality, the court said. For Vedanta, the issue goes beyond the Rs.5,600 crore demand. The ruling could also mean that the company has to source bauxite at prices materially higher than those envisaged under the old arrangement, potentially increasing the cost of producing alumina and aluminium. "The order deals a serious blow to Vedanta, not just financially but also operationally. The aluminium producer currently has no operational bauxite mines and has won the Karlapat block at a record premium, which could increase its raw-material costs," Suman Kumar, AVP, metals & mining, Phillip Capital India Pvt. Ltd told Mint earlier. Yash Tiwari in Mumbai contributed to this story...