Orissa seeks Sashubahumali bauxite for state mining corp

The Orissa government has recommended that the Centre should reserve the Sashubahumali bauxite mines for state-owned Orissa Mining Corporation (OMC). State steel and mines minister Pradeep Amat confirmed the development to FE.

In fact, the state government had earmarked the mines located in Kashipur block of Rayagada district in favour of Balco at a time when the Centre was all set to divest 51% stake and management control of the aluminium company to Sterlite. The state government had given a promissory note in this regard to the Centre following pressure from the then NDA government, which was insisting on committing the mines to enhance Balco?s valuation.

Following a controversy over the deal, the government linked the mines with Sterlite, which was setting up a refinery in Orissa. The government later withdrew its consent for leasing out the mines to Sterlite as the latter had failed to comply with the conditions within the stipulated time.

The state government is keen on leasing out the mines to London-based Vedanta Resources. At a high-level meeting held recently between Orissa chief minister Naveen Patnaik and Vedanta Resources chairman Anil Agarwal, the state government reportedly promised the mines to the company.

Government sources told FE that the mines have been promised in view of Vedanta?s proposal to ramp up its Lanjigarh refinery capacity to 5 million tonne from 1 million tonne currently. The Vedanta group has been given Niyamgiri bauxite mines through a special purpose vehicle (SPV) formed by OMC and Vedatna group company Sterlite Industries (India) Ltd (SIL).

Since Niyamgiri mines promise a reserve of 70-80 mt, Vedanta had insisted on the allotment of another bauxite mine to meet raw material demand for the expansion project.

The state government, however, found it difficult to lease out the mines, as Central-sector Nalco was the first applicant for the same. To sort out the issue, the state government set a condition that it will recommend Potangi mines in favour of Nalco if it relinquished its claim on Sashubahumali-Pasangamali mines in favour of OMC.

The chief minister also discussed Nalco?s claim over Sashubahumali mines with Union mines secretary Shantanu Consul. The state government is perhaps planning to route Sahubhumali mines to Vedanta through a joint venture between OMC and the group company, SIL.

Vedanta Resources chairman Anil Agarwal had, in fact, raised the issue at a recent meeting with Patnaik.