Nalco asked to give consent on SPV for Potangi mines area

The Orissa government has asked the public sector National Aluminium Company Ltd (Nalco) to give its consent for floating a Special Purpose Vehicle (SPV) for local area development of the Potangi bauxite project area in Koraput district.

The steel and mines department of the Orissa government has already written a letter to the chairman and managing director (CMD) of Nalco in this regard.

Sources said, the proposed SPV would be in line with the one formed by the Vedanta Aluminium Ltd (VAL) for the peripheral development of the Lanjigarh bauxite mines area.

This follows the in-principle approval by the st ate government to recommend Potangi for mining of bauxite by Nalco. However, the approval has been made conditional to fulfillment of certain conditions. First, Nalco would have to agree for the formation of a SPV for the local area development. Second, it would have to spend 5 percent of the net profit or Rs 10 crore, whichever is higher, for peripheral development of this area.

The chairman of the proposed SPV would be a government nominee and Nalco would have to contribute fund to the SPV from April 1, 2010. Potangi bauxite mines, for the purpose of SPV, would encompass both Potangi bauxite mines and Nalco’s refinery located at Damanjodi.

However, the final ML would be granted after obtaining the prior approval of the Union government and subject to the company obtaining all the statutory clearances.

The ML would be given over an area of 1738.04 hectares and the company would be allowed to undertake mining outright as the area is part of the eastern bauxite belt which was prospected earlier.

After consultation with the Orissa government, the Union ministry of mines had reserved the area for mining by Nalco under the sub section 1(a) of Section 17 (a) of the Mines and Minerals (Development and Regulation) Act, 1957.

The grant of mining lease would be a booster to the Navratna company planning ambitious expansion plans to enhance the capacity of its refinery and smelter.

It may be noted, Nalco had applied for bauxite mining lease over an area of 2618 hectares in August 1992. Subsequently, the Union ministry of mines reserved 1738.04 hectares for the company in April 2007.