India’s Ministry of Mines announced this week that it would increase the lease area for mining bauxite from 10 square kilometers to 50 square kilometers in the bauxite-rich state of Odisha.
“We had written to the mines ministry (in the first week of February) seeking its approval for increasing the cap for prospecting-mining-cum-mining-lease and mining lease, which has been allowed,” Odisha’s director of mines Deepak Kumar Mohanty explained to the press.
Odisha holds an estimated 60% of India’s 593 million metric tons of bauxite reserves. It also accounts for over 35% of the country’s bauxite production, turning out 7.64 million metric tons of the country’s 21.67 million metric tons mined in the previous fiscal year.
Industry experts believe the move will help to make it easier for the country’s aluminium industry to secure raw materials.
“Bauxite supplies have been a key constraint for several large players and they have had to depend upon smaller players with existing licenses to secure supplies. Large number of smaller deposits may be cumbersome to operate and may not favour economies of scale and modern technologies,” said Dipesh Dipu, a partner at Jenissi Management Consultants.
Dipu went on to explain that granting larger tracts for bauxite mining is beneficial for the industry as there is a market for it, and the government will likely realize better values for the land leases.
National Aluminium Co. Ltd (Nalco) stands to benefit from the move, as they operate both a refinery and a smelter in Odisha
“The step will help further consolidation of mining leases and will help us secure raw material needs,” said Nalco’s chairman and managing director T.K. Chand.
A spokesman from Vedanta welcomed the move in principal.
“However, it (the move to increase mining area) does not have any effect on Vedanta at present since we do not have any bauxite mines,” he went on to say.