Fearing no response, Odisha govt delays auctioning of bauxite blocks

Representative Image
The Odisha government is in a fix over auctioning of bauxite blocks. Despite a few blocks already explored up to the G2 level and thus meeting the criteria set by Mineral Auction Rules 2015, not a single bauxite deposit has been hitherto put to online auctions in the state that boasts of 55 per cent of the country’s reserves.

The state government fears that auctioning bauxite blocks may not elicit an overwhelming response unlike iron ore which is a key draw for Odisha due to the presence of a cluster of steel plants and other end user industries dependent on the ore.

“In Odisha, Vedanta is the only aluminium producer operating without a bauxite reserve of its own. Its peers- the state run National Aluminium Company (Nalco) and Hindalco have ample deposits to feed their units. So, we feel online auctions of bauxite may not evoke a robust bidding interest”, said an Odisha government official.

Nalco is drawing bauxite from its flagship Panchpatmalli mines to feed its alumina refinery at Damanjodi. The navratna producer also has mining rights over Pottangi endowed with 75 million tonnes (mt) deposits and is supposed to meet the requirement of Nalco’s future expansion of the refinery. Nalco is adding a fifth stream to the Damanjodi refinery of one mt capacity per year at an estimated cost of Rs 5500 crore.

Hindalco’s Utkal alumina refinery project in Rayagada district is well supplied by Baphlimali mines with bauxite reserves to last for over 20 years.  

Across the country, six bauxite blocks have been offered for competitive bidding. All six blocks have been auctioned in Maharashtra, data from the Union mines ministry website showed.

Reservation of bauxite blocks in favour of its mine PSU- Odisha Mining Corporation (OMC) is another option the state government is evaluating.

Presently, OMC is unearthing bauxite from Kodingamali deposit near Rayagada. As per a long-term linkage agreement, 70 per cent of the bauxite extracted from this mine is supplied to Vedanta’s alumina refinery at Lanjigarh installed at the foothills of the bauxite laden Niyamgiri hill range. The balance 30 per cent of the mine production is put to electronic auctions. Bauxite auctions are organised by OMC twice a year. In last fiscal, OMC sold 1.68 mt of bauxite ore.

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel