Four firms in race for Rs.14,000cr alumina plant in Gujarat

India Infoline News Service | Mumbai | January 13, 2011 11:46 IST

Gujarat Mineral Development Corp. Ltd (GMDC), a listed company partly owned by the Gujarat government, has shortlisted four firms for setting up a one million tonne (mt) alumina refinery in Kutch district of the state. They are JSW Aluminium Ltd, Hindalco Industries Ltd, National Aluminium Co. Ltd (Nalco) and Jaypee Associates Ltd. JSW Aluminium Ltd is a newly formed subsidiary of JSW Steel Ltd. One of the four firms will be selected after getting necessary approvals from the state government and the company's board, a senior government official said. The Rs.14,000 crore refinery also includes a 500,000-tonne smelter for converting alumina into aluminium. GMDC had received expression of interests for the project from Gujarat Foils Ltd, Aluchem Ltd (US), Dubai Aluminium Ltd, Adani Group and Jindal Steel and Power Ltd apart from the shortlisted companies. Gujarat has got huge reserves of bauxite, the basic raw material required for producing alumina.

GMDC will supply the mineral for 20-30 years. A senior GMDC official involved in the project confirmed the development but declined to be named as the process of identification of a partner is not completed yet. The project also involves setting up of a captive power plant of 60-100MW, the GMDC official said. GMDC had earlier entered into an agreement with Ashapura Minechem Ltd for the refinery project. An agreement was signed in 2005 and with the project making little headway in five years, the state undertaking scrapped the deal with the Mumbaibased firm and invited fresh tenders. A top official of Ashapura Minechem had earlier told Mint that they were no longer associated with the Kutch alumina project. The bauxite deposits in the western state are estimated to be about 104 mt. About 90% of these deposits are in Kutch, Jamnagar and Junagadh districts. Kutch alone has proven reserves of 60 mt, according to the GMDC official. The state government came up with a directive in November 2009 stipulating that all surplus mineral reserves will be sold or exported through GMDC.

The objective is to promote the refinery project and curb illegal mining of bauxite. As per the directive, the units using bauxite for calcination and beneficiation purpose will not be given fresh bauxite lease. The state has at least 200 small units in Jamnagar and Porbandar, solely dependent on calcination-a process in which a material is heated to a temperature below its melting point. The new mineral policy, however, has made provisions for giving mining leases to players who are willing to establish units in Gujarat for producing value-added products from plant grade as well as non-plant grade bauxite- be it refractories, castables, brown fused alumina, highgrade alumina cement, alumina. The government's "monopoly" move has affected the business of small players, claimed a Porbandar-based bauxite player who has been in the industry for three decades. According to him, many plants are currently running at 25% of installed capacity or less. About 7.1 mt of raw bauxite worth '100 crore is lying unsold in Kalyanpur district of Jamnagar as the state government is yet to decide on the fate of the bauxite mined by the industry before it changed its policy, another small firm alleged. None of them was willing to be identified as they were critical of the state government's policy. According to the Ashapura Minechem official, the state government should consider giving fresh lease to bauxite calcination units as the process creates value addition as high as 10 times. A state government official, part of a team formed to nab illegal miners in Gujarat, said the policy aims at discouraging rampant illegal mining, especially of bauxite. Many of the players who were allotted mines for captive use got into trading of raw bauxite. As a result, the industry did not flourish, he added.