You are here: Home » Economy & Policy » News
Business Standard

Odisha proposes bauxite mines lease for L&T

Kutrumali, Sijimali mines can supply bauxite to Vedanta refinery

Jayajit Dash  |  Bhubaneswar 

Ending years of uncertainty, the Odisha government has recommended to the Centre for allotment of two bauxite deposits, Kutrumali and Sijimali in south Odisha, to engineering & construction giant Larsen & Toubro (L&T).

L&T held the prospecting licence (PL) for these deposits for last two decades. But the state was unwilling to recommend its case for grant of mining lease (ML) as the company did not have any end use plant in the state.

"The state government has recommended L&T's case to the Union mines ministry for award of ML over the two bauxite deposits. Since L&T holds a PL, it is eligible to get the ML under the amended Mines and Minerals - (Development & Regulation) Act, 2015," said an official with direct knowledge of the matter.

R K Sharma, principal secretary (steel & mines), Odisha refused a comment on the matter. Earlier, this month, L&T's group executive chairman A M Naik met the chief minister Naveen Patnaik, impressing upon him the need to recommend the company's case for ML over the bauxite deposits. Kutrumali and Sijimali, located across Rayagada and Kalahandi districts, have combined reserve of 300 million tonne of bauxite.

L&T had won PL for Sijimali and Kutrumali bauxite mines in 1992. But the PL had expired two years later, after which the state government had denied ML to L&T since it had decided that mining properties would not be given to any entity which did not have a value-addition project in the state.

Faced with such constraints, L&T, in 2005, had proposed a joint venture with Dubai Aluminium (Dubal) for setting up of Rs 30,000 crore aluminium complex comprising three million tonne per annum (mtpa) alumina refinery at Rayagada and also a 1.5 mtpa aluminium smelter plant and a captive power plant (CPP) in western Odisha. Though a special purpose vehicle (SPV) called Raykal Aluminium was formed for the purpose, the project has so far remained a non-starter.

Seven years later, in 2012 when Dubal walked out of the SPV, Vedanta Aluminium Ltd (now Vedanta Ltd) bought 24 per cent stake in the project. The grant of ML to L&T over the bauxite deposits can come to the rescue of Vedanta refinery at Lanjigarh, which is facing raw material crunch due to denial of supplies from Niyamgiri mines on environmental grounds and local protests. The refinery is currently keeping its operation barely afloat by importing bauxite from states like Chhatisgarh and Andhra Pradesh and also places abroad like New Guinea.

The state government's counsel in the Supreme Court Uday U Lalit, in 2013, had given a legal opinion in favour of L&T for grant of ML over Kutrumali and Sijimali. The counsel had also opined that long-term supplies to Vedanta's refinery from the two bauxite deposits of L & T is legally tenable.

First Published: Wed, May 27 2015. 20:19 IST