AP explores options to end stalemate over UAE alumina refinery project

By Santosh Patnaik

Visakhapatnam: After finding itself on a sticky wicket, the Andhra Pradesh Government is keen to find out a viable solution to operationalise an alumina project near here, seven years after it was completed with an investment of about Rs.6,000 crore.

The trigger for the exercise was the international arbitration raised by Ras-al-Khaimah Investment Authority (RAKIA) after the State Government led by Chief Minister Y.S. Jagan Mohan Reddy cancelled the bauxite supply agreement made by AP Mineral Development Corporation (APMDC). The erstwhile Telugu Desam Party Government of Chief Minister N. Chandrababu Naidu had also announced not to allow bauxite mining in the forests of Eastern Ghats following protests by tribal and anti-mining activists.

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Ras-al-Khaima is among the seven emirates that form the UAE.

RAKIA along with its Indian partner Penna Group had signed agreement with APMDC for massive investment in an alumina refinery, smelter and captive power plant at Rachapalle in Makavarapalem block of Visakhapatnam district, about 80 km from here. A special purpose vehicle Anrak Aluminum Limited was formed to implement the project on a fast-track mode.

The project proponent which acquired land completed work on 1.5 million capacity refinery in 2013. It could not operate it for want of bauxite ore, the main raw material, which was promised from Gudem and Chintapalle blocks in the district. The mining areas are considered hotbed for outlawed left-wing extremists.

Peeved over cancellation of bauxite supply agreement, RAKIA, which opted for arbitration sought compensation over an investment of $44.7 million in the project. The project proponent borrowed a loan from State Bank of India-led consortium which was given non-performing asset tag over default in repayment following failure to commission the refinery.

Maoists had issued several threats demanding shelving of the project.

Samata, an NGO which got the order on Land Transfer (Prohibition) Act known as Regulation 1 of 70 on restricting land ownership to only tribals in the scheduled areas, had also decried bauxite mining in the area due to fears over affecting livelihoods of people.

A committee formed by AP Government with senior officials to make representation to the Government of India was convened on Tuesday to discuss options to facilitate supply of bauxite ore, RAKIA proposal to buy its equity and plea to refund Rs.135 crore remitted to the Ministry of Environment and Forests through APMDC.

Other issues under examination include working out possibility of opertionalising the refinery and resolving matters pending between the governments of AP and India.

“We will oppose tooth and nail any attempt to undertake bauxite mining in the tribal areas,” former MLC M.V.S. Sarma told Siasat.com.

He asked what was the obligation of the State Government in the project following arbitration case filed by RAKIA? He also wanted to know why there was attempt to buy Anrak’s equity as an out of court settlement ignoring fears over impact of bauxite mining on the fragile ecosystem of Eastern Ghats.

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