Bauxite mining ban in Andhra Pradesh further clouds the future of 1.5 million-tonne Anrak alumina refinery

The announcement of withdrawal of the mining order in the Eastern Ghats by Andhra Pradesh Chief Minister YS Jagan Mohan Reddy on June 25 has put the future of the 1.5 million-tonne Anrak alumina refinery set up by Anrak Aluminium Limited (AAL) in Visakhapatnam in dark. Bauxite mining rights were issued by the previous N Chandrababu Naidu government in November 2015.

AAL, a joint venture between Penna Group and Ras Al-Khaimah Investment Authority (RAKIA) set up the refinery in 2013 with a total investment of over INR 6,000 crore. It was allowed to mine bauxite in Gudem and Chintapalle blocks through A.P. Mineral Development Corporation via an MOU signed in 2007 under the undivided AP. However, N Chandrababu Naidu government annulled the bauxite supply agreement with Anrak Aluminium following a public outcry over the impact of bauxite mining in the scheduled areas and the environment.

The refinery that has been lying idle for five years would need 4.5 million tonne of bauxite ore per annum to run at its full capacity. 

AAL is also making efforts to remove the Non-Performing Asset (NPA) tag attached to it following its failure to repay a loan of ₹3,461 crore to a consortium led by State Bank of India (SBI). Anrak Aluminium was hopeful of restarting operation after receiving an order from High Court initiating the insolvency process based on the company's one-time settlement offer of a loan of INR 1,275 crore. However, now the complete cancellation of bauxite mining in Andhra has put the developments into uncertainty.

Sources said that after the cancellation of the G.O., AAL may try to procure bauxite from Kakirigumma, Bahumali and various other mines owned by Odisha Mining Corporation (OMC) in undivided Koraput district of Odisha to start the refinery. However, this will raise the cost of production to a considerably high level.

It is to be noted that National Aluminium Company (NALCO) has also applied for mining lease in Gudem in Visakhapatnam and Kataraju Konda in East Godavari district. It is not clear yet how the mining ban will impact the mining applications submitted by the public sector company.