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Vedanta's efforts to source local bauxite for its Lanjigarh alumina refinery is finally paying off. The refinery which has been running on externally sourced bauxite since its operations can now buy bauxite on a long-term basis from state-owned Odisha Mining Corporation (OMC) at market prices discovered through auctions.
The decks for Vedanta were cleared after the Odisha Cabinet approved a long-term linkage policy for bauxite. As per the terms of this policy, 70 per cent of the saleable stock of bauxite would be made available for long-term linkage (LTL) and the rest 30 per cent is to be sold through national e-auctions.
The weighted average price derived from the national e-auction would be the LTL price. The floor price for the national e-auction would be kept at cost of production plus a profit margin of 50 per cent.
Earlier, the Odisha government had constituted a committee under the chairmanship of the Chief Secretary to make appropriate recommendations on nature and detailed modalities for the supply of bauxite ore by the OMC to the Lanjigarh alumina refinery as and when any bauxite mining leases are operated by OMC.
At the national e-auctions, OMC would directly deal with the end-user industries. Participation by the traders would be considered only if there is lack of adequate response from the end-user industries.
The state cabinet decided that more bauxite blocks would be explored through outsourcing by the steel & mines department. OMC would explore the statutory clearances for the blocks assigned to it. If the progress of the blocks is not found to be satisfactory, they can be surrendered and auctioned for PL (prospective license) cum ML (mining lease) by the state government.
A part of the Karlapat area, excluding the ML area granted to OMC, would be de-reserved and auctioned for PL cum ML for speedy exploitation of bauxite to ensure revenues for the government.