Ideally, the least of concerns for Indian smelters of aluminium should be the sourcing of bauxite from which the intermediate chemical alumina is derived. The reason is the country’s bauxite reserves (proved, probable and possible) are well over three billion tonnes (bt) making it the world’s fifth largest owner of the mineral. Countries endowed with richer deposits are Guinea, Australia, Brazil and Jamaica. Whatever the riches of our deposits, the country has not seen the opening of a new bauxite mine close to the size of the one at Panchpatmali hills in Odisha opened by the National Aluminium Company Limited (Nalco) some 30 years ago.
It has been seen time and again that from identification of bauxite deposits to winning leasehold over areas to be mined and getting a host of environment and forest clearances, the process is so frustratingly time-consuming that groups planning to build alumina refineries on the basis of captive bauxite mines run the risk of being worn out of patience. No group has found itself in as difficult a bind as Vedanta Aluminium, which in the belief that overcoming all the odds it would be able to feed its alumina refinery at Lanjigarh in Odisha where capacity could be expanded to six million tonnes (mt) from one mt by opening mines at Niyamgiri hills. This, however, proved to be a non-starter thanks to some spirited campaigns by NGOs and goalpost shifting by government agencies. Vedanta is, therefore, compelled to source bauxite from more than one source to feed its refinery. In the process, its cost of production of alumina and aluminium is significantly more than would be the case had three mt of bauxite come annually from Niyamgiri.
The desperate search for deposits alternative to the one of about 90 mt at Niyamgiri hills has led Vedanta to acquire Dubai Aluminium’s (Dubal) ownership of Raykal, a special purpose vehicle (SPV)created by Larsen & Toubro and Dubal with ownership ratio of 76 per cent and 24 per cent, respectively. Vedanta’s interest in Raykal in which it retains the right to become the single owner over a period of time provided it achieves “certain milestones,” is not because of the SPV’s grounded plan to build a three mt refinery but for the two bauxite deposits in the upstream in Odisha for which L&T was issued prospecting licences in 1992 but since lapsed for lack of activity. With Vedanta entering the scene with a hugely growing appetite for bauxite and a big refinery in the state to show, it may already have started the work to get the prospecting licences for two deposits totalling an estimated 280 mt revived and then get these converted into mining licences. The development must be giving comfort to the Orissa government, which made many attempts to break the logjam at Niyamgiri. Vedanta is, however, not expected to give up pursuing the state government to compensate it for virtual loss of Niyamgiri by giving it access to new deposits.
In time slippages, Utkal Alumina which was conceived as early as 1990s remains ahead of Raykal. All the original promoters, including Norwegian Hydro, Canadian Alcan (now part of Rio Tinto) and Tata Industries left the project one by one frustrated by the roadblocks. Utkal Alumina, since under full ownership of Hindalco, will finally be commissioning a mine of capacity close to 4.5 mt in October and a 1.5 mt alumina refinery in January 2013. Utkal Alumina has ownership of 198 mt of bauxite deposit in Baphlimali hills. The commissioning of mines there will be an event of its kind in Odisha in nearly three decades. Hopefully, another wholly owned enterprise of Hindalco building an alumina refinery-cum-smelter in Odisha will have success in opening mines at Odisha’s Lakharis having bauxite deposit of 45 mt and Kodingamali where the resource is bigger at 85 mt.
A government minister is supposed to be a facilitator of new industries coming up, while at the same time keep an eye that displaced families are properly settled with sustainable sources of income and the environment is not damaged. But when a central minister recently shot off a letter to the Andhra Pradesh governor that there should be a blanket ban on bauxite mining in Vizianagaram and Visakhapatnam for that could destroy forests and pollute rivers, he acted without considering that such eventualities could be avoided by taking preventive steps. For the minister, the compulsion to improve his profile among the tribal fraternity took precedence over commitments by Andhra Pradesh Mineral Development Corporation to supply bauxite from the two districts to refineries planned by JSW and Anrak, part of Ras Al Khaimah of UAE. If anything, such attitudes are helping the extremists to rally tribals against the opening of any new mines. Hasn’t Nalco virtually put on hold its bauxite mines project in AP and a refinery in downstream because of unchecked disturbances by Maoists? Nalco Chairman B L Bagra will, however, euphemistically describe extremist threats as “unfavourable ground conditions”. The country has got large aluminium capacity in the pipeline and also on the drawing board calling for opening of many new bauxite mines. The challenge is to remove all roadblocks, including extremist threats to new mines openings.