Can Chandrababu Naidu start bauxite mining in AP?

In his two earlier stints as chief minister of Andhra Pradesh, Chandrababu Naidu had turned the once sleepy capital city of Hyderabad into a major information technology hub. His impressive work was praised by many world leaders, including Bill Clinton and Tony Blair.

Back in power after 10 years, Naidu has taken up the daunting task of opening bauxite mines in the state, amid opposition from various sections of society, political parties and Maoists.

Andhra Pradesh has the potential to emerge as a major centre of alumina and aluminium production, next only to Odisha. Of India's bauxite resources of 3.48 billion tonnes, Andhra Pradesh accounts for 18 per cent. As much as 52 per cent of the resources are found in Odisha, where the country's three aluminium groups-Hindalco, Vedanta and National Aluminium Company (Nalco) - are engaged in capacity expansion. These two major bauxite-owning states are facing a common and intractable problem of arriving at a consensus among all stakeholders, in terms of opening new big mines. Since the early 1980s, when Nalco had opened a mine at Panchpatmali hills in Odisha's Koraput district, with original reserves of 377 million tonnes (now depleted to about 160 mt), no new major bauxite deposits have been readied for exploitation.

In about a year, the Indian aluminium sector's capacity will stand at 4.36 mt. But much of the incremental capacity will have no raw material security, as opening of new mines is stalled by local citizens, invariably aided by non-governmental organisations and Naxalite violence. Vedanta's alumina refinery at Lanjigarh has faced the brunt of the stalemate in bauxite mine development. The company has to procure three mt of bauxite from different parts of the country, as well as from Guinea, for improving the quality of blended raw material. It is, therefore, natural that those in the sector are enthused by Naidu's bid to break the bauxite mining logjam. Without a doubt, a breakthrough in Andhra Pradesh and proposed amendments to the Mines and Minerals (Development and Regulation) Act will create ideal conditions for allocation of new deposits to deserving groups in all bauxite-bearing states. But the odds against Naidu are heavy.

In a petition to the chief minister, civil society has said bauxite mining in the state's Visakhapatnam district, which has reserves of 546 mt, will disturb the "fragile ecological system of the Eastern Ghats", where several rivulets originate. It adds if polluted rivulet water finds its way into the country's second-largest river, Godavari, agricultural production will be hit. The two communist parties, along with Maoists, have further stepped the up anti-mining campaign in bauxite-bearing zones.

But in a deft move, Naidu has been able to take the sting out of the Left's campaign by announcing he would assign the task of bauxite mining to the state's Integrated Tribal Development Agency, along with a public sector undertaking with experience in the field. It is clear to all he has Nalco in mind, the country's largest bauxite miner and producer and exporter of alumina.

Some years ago, the Andhra Pradesh government had allotted the Gudem and Katamraju bauxite deposits in Visakhapatnam district (85 mt) to Nalco. The allotment is subject to Nalco building a 1.4-mt alumina refinery in the downstream. In addition to the two deposits, the state had assured Nalco of extra bauxite supply of 25 mt from its own sources, ensuring bauxite supply security for 25 years. Though the company set out to do the mining-cum-refinery project in right earnest, due to sustained violent agitation by Maoists, it decided it would be wise to put the project on hold. Nalco Chairman Ansuman Das says he will wait for "Naidu magic to work. We will certainly do the project once the chief minister has his way".

Anrak Aluminium, a joint venture between Ras Al Khaimah Investment Authority (of the UAE) and Penna Cements, built a 1.5-mt alumina refinery through an agreement with Andhra Pradesh Mineral Development Corporation (APMDC) that it would supply bauxite from its 225-mt Jerrala deposit. But APMDC could not keep its commitment, as the Centre froze all earlier clearances for bauxite mines development in August 2010.

Naidu's success will prove to be a blessing for Anrak.