Andhra Pradesh, India: Fresh bidding plans to operate Anrak Alumina refinery brings back Bauxite mining issue

The contended bauxite mining issue returns in the prominence with condemnation forthcoming to over the fresh bids to consider operationalizing the Anrak Alumina Refinery in Visakhapatnam district of Andhra Pradesh.

Anrak Aluminium Limited, a company floated by Ras-al-Khaimah and Penna Group in 2013 built the alumina refinery, with an investment of approximately INR 6000 crore. However, AAL could not initiate operations following the cancellation of bauxite supply agreement by Andhra Pradesh Mineral Development Corporation (APMDC), as the present state government declared it was against bauxite mining in the marked areas respecting sentiments of inhabitants, who had opposed intensely saying it would devastate their livelihood and environment in the region.

The Indian state-run Aluminium company NALCO, with its headquarters in Bhubaneswar, Odisha and a refinery and mines in neighbouring Koraput district had made attempts to secure mining leases in Visakhapatnam and East Godavari districts by holding discussions with the Central and Andhra Pradesh State Government. TT.K. Chand, The then NALCO CMD said: “NALCO is keen to establish a greenfield refinery in Visakhapatnam with an estimated investment of INR 7,000 crore to INR 12,000 crore subject to obtaining clearances.”

Ras-al-Khaimah Investment Authority, known as RAKIA was enraged over the decision and filed an international arbitration case claiming compensation for its investment of $44.7 million. It also had committed an investment towards an aluminium smelter and a power plant in the area. The refinery is located at Rachapalle, about 80 km from Visakhapatnam.

In a fresh development, the State Government held a meeting of a high-power committee to explore multiple options that included supplying bauxite ore to Anrak, buying the equity made by the project promoter and various other options.

E.A.S. Sarma, social activist and former IAS officer hailed that government order vide GO Ms No. 89 (Ind & Comm) dated 9-12-2020, and said it has rightly constituted a senior official committee to work out the modalities of opposing the arbitration proceedings. “I am glad that the committee has a representative from the Union Ministry of Mines,” he said and opined that the State Government should tread cautiously while dealing with this arbitration matter, as arbitration relief once awarded is difficult to contest before the courts. It will be all the more difficult to pursue the matter before an international arbitrator.

R. Karikal, Special Chief Secretary, Industries and Mines Department, with a letter enclosed a copy of the MOU entered into by APMDC with RAK in 2008 for ready reference.

He said: “The MOU does not provide any scope for arbitration in general and international arbitration in particular. Therefore, RAK (Ras-al-Khaimah) cannot invoke any provision of either the Indian Arbitration Act or any international arbitration arrangements. I suggest that the government gets this aspect examined from the legal point of view and, if possible, contest the international arbitration proceedings before either the High Court or the Supreme Court.”

“As per Clause 1.1 of the MOU, the MOU is subject only to Indian laws. Article 4 defines the ‘conditions precedent’ to the MOU becoming effective. Since the mining lease itself had been revoked and APMDC which is a party to the MOU had been prevented from taking up mining, one of the primary conditions, namely, its ability to deliver bauxite, had not been fulfilled. Therefore, it is perhaps valid to say that the MOU had never become effective”, he pointed out.