Union Tribal Affairs Minister V Kishore Chandra Deo's singular opposition to bauxite mining in the forest areas of Visakhapatnam has a newly-built plant scouting for alternative sources.
Anrak Aluminium Limited, one of the two companies that had entered into an agreement with the Andhra Pradesh government for setting up alumina refinery and smelter plants in 2007, in the district. The company had made an investment of about Rs 3,000 crore in the project in anticipation of bauxite supplies, admit the officials in the state government.
With no resolution of the current stand-off in sight, Anrak has started operations by sourcing the raw material from Gujarat for the time being. "It started operations about 3 months ago but did not communicate anything officially to this effect to us," said an official in AP Mineral Development Corporation (APMDC).
Jindal South West Holdings Limited, a part of the Jindal group, however, has not made any moves though it signed an MoU for a similar project in 2005.
Deo, represents the Araku (ST) Lok Sabha constituency, which supposedly has one of the country's largest bauxite reserves of over 1,000 million tonnes. The minister had upped the ante against bauxite mining after the change in leadership in the state following the death of YS Rajasekhara Reddy (YSR). Last year, he had written to the mines ministry as well as the state governor to repeal the in-principle mining leases already granted to the APMDC in areas allocated for Anrak.
The state government too was wary of the project as the Indian partner of the joint venture company, Penna group, owned by YSR's friend Penna Pratap Reddy already figures in the CBI investigation related to the alleged quid pro quo investment case filed against Kadapa MP and YSR's son YS Jagan Mohan Reddy. The Government of Ras Al Khaimah was expected to hold a majority equity in the project.
The AP government recently wrote a letter to the Centre defending bauxite mining after the APMDC last year informed the government that there would be problems, legal and otherwise, if the supply agreement with Anrak was not honoured.
Besides, the failure to implement the supply agreement also comes at a cost for the corporation as it would have to reimburse the Rs 400 crore the company had spent on afforestation and on providing jobs and training to local tribals, according to the official.
Under the agreement signed in October, 2008, the APMDC was supposed to supply 3.8 million tonnes a year bauxite ore to the company, which had proposed to set up a 1.5-million tonne alumina refinery and a 0.25-million tonne capacity aluminium smelter project.
The company can seek legal remedies for any failure to supply bauxite by the APMDC only after it gets the stage-2 clearance for the bauxite mining from the Ministry of Environment, which is due, the official said.