Government considers altering the pricing structure to establish the new average selling price of bauxite

28 Jul 2022 , 07:47 AM

In order to draw in private players to the market, the government is thinking about making modifications to the pricing mechanism to determine the Average Selling Price (ASP) of metallurgical grade bauxite.

States are currently prohibited from auctioning off their bauxite resources because businesses believe the mineral’s selling price to be unprofitable.

Bauxite is the primary source of aluminium, making it a crucial component in the production of aluminium. The mining law would need to be changed to accommodate the change in computation, and the mines ministry has requested recommendations for this.

Many businesses and trade groups have worked to change the conversion factor in order to get the ASP for metallurgical grade bauxite. The ministry stated in a note for consultation on the proposed adjustments that the ASP attained through the current conversion factor was very high when compared to the actual price of bauxite.

Due to persistent requests, a panel established to create a national mineral index was given the problem by the mines ministry.

The rules governing mineral concessions would also need to be adjusted as necessary, the ministry said, “to provide that whenever the conversion factor is revised, the revised conversion factor would be applicable for all MLs, whether auctioned before or after the revision of the conversion factor, for the minerals removed or consumed from the leased area after such revision.”

In the current fiscal year, the government has released tenders for 14 bauxite mines, 12 of which were carried over from FY22. Two bauxite block auctions have thus far been cancelled in FY23.