In a move that will benefit aluminium maker Vedanta, the Odisha cabinet on Wednesday approved a long-term linkage policy for bauxite.Anil Agarwal’s Vedanta has had a long and difficult wait for the key raw material used to make aluminium. Under the policy announced today, the Naveen Patnaik’s governmnet will offer bauxite at market prices discovered through auctions. However, of the three aluminium makers in Odisha, state-owned NALCO, the Aditya Birla Group’s Hindalco and Vedanta, it is only Vedanta that does not have a captive mine. It has been running its Lanjigarh refinery on bauxite sources from outside the operations.
Wednesday’s announcement comes weeks after the Odisha government owned Orissa Mining Corporation got all its clearances, environment and forest, allowing it to develop the first standalone bauxite mine in the state at Kodingamali.
Odisha is generously endowed with bauxite that combined with its coal and water resources has attracted billions of dollars in investments.
Odisha has bareserves of 1968.86 million tonnes, annual production is only 9.2 million tonnes. The cabinet today decided that it would explore more blocks and in the future the ones that OMC failed to get clearances, it would surrendered and auctioned. Accordingy a prospecting cum mining lease for a part of the Karlapat bauxite reserve, excluding the mining lease granted to OMC, would be de-reserved and auctioned.
Under the policy, only 70 per cent of the saleable stock of bauxite would be made available for long-term linkage. The remaining ore would be auctioned with priority given to end-users or aluminium makers. The policy clarified, the floor price for the auction from which the long-term prices would be derived, would be cost of production plus profit margin of 50 per cent.
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