Hindalco, Balco, Anrak to source bauxite from Odisha Mining Corporation

Odisha Mining Corporation's (OMC) maiden attempt to sell bauxite at its e-auctions has evoked considerable buying interest from players within and outside of the state.

At the inaugural e-auctions, OMC has offered 190,000 tonnes of bauxite drawn from its captive lease at Kodingamali in southern Odisha.

"We have received the participation of BALCO (Bharat Aluminium Company), Hindalco for its units at Muri and Belgaum and Anrak Aluminium at the bauxite e-auctions. As per the policy finalized, 30 per cent of our saleable bauxite would be liquidated through auctions”, said R Vineel Krishna, managing director, Odisha Mining Corporation (OMC).

Earlier, Anrak Aluminium, a joint venture forged by Andhra-Pradesh based Penna Group with  Ras-Al-Khaimah Investment Authority, had looked to source bauxite from OMC as ore supplies from the home state had dried out. 

Anrak Aluminium set up the alumina refinery of 1.5 million tonne annual capacity at Makavarapalem (Andhra Pradesh) on promise of assured bauxite supplies from Andhra Pradesh Mineral Development Corporation (APMDC). The deal mandating supply of 224 million tonnes of bauxite was signed but failed to materialize.  Construction work on the refinery was completed in 2013 but the project could not be commissioned without bauxite availability in sight. Anrak Aluminium had also proposed to  invest of Rs 120 billion to install an aluminium smelter at Odisha's Gopalpur along with a captive power plant (CPP).

OMC has commenced bauxite mining operations at its Kodingamali mine. While 30 per cent of the mined ore would be offered for auctions, the remaining 70 per cent is to be sold via long-term linkage. The long term linkage arrangement would benefit only Vedanta since the other two state based aluminium makers- National Aluminium Company (Nalco) and Aditya Birla Group owned Hindalco Industries are fed by captive bauxite supplies. Ever since it started commercial operations, the Lanjigarh alumina refinery owned by Vedanta was running on externally sourced bauxite. Its efforts to extract bauxite from the Niyamgiri hills came a cropper as local Dongaria tribes nixed the mining plan at gram sabhas in 2013.

The weighted average price derived from the national e-auctions of bauxite would be the price for long-term linkage. The floor price for the national e-auction is pegged at cost of production plus profit margin of 50 per cent.

Earlier, the Odisha government had constituted a committee under the chairmanship of the Chief Secretary to make appropriate recommendations on the nature and detailed modalities for supply of bauxite ore by the OMC to the Lanjigarh alumina refinery as and when any bauxite mining leases are operated by OMC.

OMC is known to be a supplier of iron ore and chromite to industries in Odisha and elsewhere in the country.