OMC initiates steps to scrap bauxite mining JV with Sterlite, Hindalco

Odisha Mining Corporation (OMC) has started the process to scrap bauxite mining joint venture (JV) projects with Hindalco and Sesa Sterlite after the state government said the state-run miner can take a decision to do so.

“We have sent show cause notices to Hindalco and Sesa Sterlite after the government said we can take a call on this. They have been asked to send their replies within two weeks,” said Girish S N, managing director of OMC, saying the notices were sent earlier this month.

The companies have been asked to reply why JVs with them would not be scrapped as they have not achieved progress as per the agreement, he added.

OMC had formed South West Bauxite Mining Company (Pvt) Ltd with 26:74 equity shareholding in association with Sterlite Industries India Limited (SIIL) in 2009 for supply of bauxite deposited in Kalahandi and Raygada districts for the aluminium refinery of Vedanta Aluminium Ltd, now known as Sesa Sterlite.

However, the project received heavy resistance from the locals of Niyamgiri hills (with 78 million tonne bauxite deposit) ahead of starting mining activities in the area and subsequently, the Union Ministry of Forest and Environment had cancelled the final forest clearance for the project. Though Sesa Sterlite requested allocation of another area for bauxite mining, OMC did not take any step.

Similarly, East Coast Bauxite Mining Company (Pvt) Ltd was formed in 2005 with 26:74 equity holding between OMC and Hindalco Industries Ltd. It was executed for development of Kodingamali bauxite mines (having estimated reserve 85 million tonne) in Koraput district and supplying the raw material to the alumina refinery of the Hindalco. This project also met with similar fate that of Sesa Sterlite’s due to land acquisition problem as villagers opposed mining in their area.

Both the companies have set up their aluminium refinery and smelter units in the state and are struggling to source key raw material bauxite. While Sesa Sterlite has invested over Rs 50,000 crore on its projects, Hindlaco’s investments in the state are pegged at around Rs 21,000 crore.