Ashapura gets mining rights in Kutch

Cabinet reportedly bypassed expert panel's recommendations

Bypassing the recommendations of the industries and mines department, the state Cabinet has reportedly allotted the rights to mine bauxite in Kutch and set up a 30 million metric tonne per annum (MMTPA) capacity alumina refinery to Ashapura Minechem Ltd last week.

Earlier a five-member expert committee formed by the state industries and mines department had recommended that pipe manufacturing firm Man Industries Ltd should be given the projects.

Though the government has issued a general resolution last week allotting the mining rights to Ashapura, minister of state for industries and mines Anil Patel on Tuesday refused to provide details of a formal announcement.

The project, which is expected to attract investment of over Rs 1,500 crore, has been in the news as both Man Industries and Ashapura resorted to strong lobbying to bag the project. Both these entities had opted for strategic partners from the US and China, respectively.

The company officials as well as the top brass of state run Gujarat Mineral Development Corporation (GMDC) refused to comment on the developments.

A source in the corporation, which has the final say to decide about mining rights, said, "The state government has allotted the mining rights to Ashapura Minechem for the bauxite project in Kutch and a government resolution on this regard has already been issued. The expert committee set up to look into the matter was of the opinion that Man Industries should be given the rights."

Patel said, "The state government wants the alumina project to come up in Kutch and based on the terms and conditions, a company will be given the project. The state government will make an announcement which a decision is taken."

"But I cannot comment when the government would formally make an announcement and I cannot also divulge the recommendations of the expert committee," Patel said.

The committee, headed by principal secretary of industries and mines department D Rajagopalan, has recommended, "The technology for special alumina-based chemicals is a guarded one and such products will be produced in the country for the first time. Hence the proposal of Aluchem of the US, partner of Man and MAn Group always have a leverage over the proposal of Ashapura Minechem."

Following the controversy, which was sparked off since Man Industries and Ashapura locked horns over the project as the state government invited expression of interests for the project, the government around two months back set up a high-level expert committee headed by D Rajagopalan, principal secretary (industries, mines).

"The committee was of the opinion that the project should be awarded to Man Industries for various reasons including its joint venture partner Aluchem Inc of the US, which is a global major in alumina projects. But the Cabinet intervened few days back and decided against the experts' recommendations which has now caused disappointment for Man. The company has already made significant investment in Gujarat for its pipe manufacturing facility," said a source close to Man.

Ashapura has entered into a joint venture with its Chinese partner, Sichuan Aostaar Aluminium Company Ltd (SAAC).

It had also signed a buyback agreement with SAAC for procuring 75 per cent of the alumina for the next 30 years.

"The project cost of Rs 1,500 crore would be funded 40 per cent through equities and 60 per cent through long-term borrowings from banks and financial institutions," said Chetan Shah, managing director of Ashapura.