Anrak alumina project stares at uncertain future

The Hindu | Vizag | June 27, 2019

A question mark hangs over the future of the 1.5 million-tonne alumina refinery set up by Anrak Aluminium Limited (AAL) in Visakhapatnam district with Chief Minister Y.S. Jagan Mohan Reddy announcing the cancellation of a key Government Order.

The refinery, set up in 2013 with a total investment of over Rs.6,000 crore, was allowed to mine bauxite ore in Gudem and Chintapalle blocks through G.O. Ms. No. 97. The mining was done by A.P. Mineral Development Corporation in the reserve forest area.

Non-performer tag
AAL, a joint venture between Penna Group and Ras Al-Khaimah Investment Authority (RAKIA), is making efforts to remove the Non-Performing Asset (NPA) tag attached to it following its failure to repay a loan of Rs.3,461 crore to a consortium led by State Bank of India (SBI).

Public outcry
As per an MoU signed in 2007 with APMDC, a commitment was made to supply raw material for the refinery. However, GO Ms. No. 222 committing supply of bauxite ore was scrapped by the previous TDP government following a public outcry over the adverse impact of bauxite mining in the scheduled areas and the environment.

Though construction of the alumina refinery was completed at Rachapalle in Makavarapalem mandal, about 80 km from here, production could not commence for want of raw material. Project proponent RAKIA went to the extent of filing an arbitration petition against the Centre and the State Governments claiming compensation on the $44.71 million investment made by them on the refinery complex.

Sources told The Hindu that with the cancellation of the G.O., the company while pursuing a settlement with the bankers might attempt to procure raw material from Kakirigumma, Bahumali and various other mines owned by Odisha Mining Corporation (OMC) in undivided Koraput district of Odisha and operate the refinery in Visakhapatnam — a move that would take a heavy toll on the cost of production.

NALCO plans
It is still unclear whether the decision to withdraw G.O. Ms. No. 97 would have any impact on mining applications submitted by National Aluminium Company (NALCO), a public sector company located in Koraput.

The company’s applications for a mining lease in Gudem in Visakhapatnam and Kataraju Konda in East Godavari district were at various stages of consideration. The company feels that the Samata judgement, which prohibits mining by private firms, would not come in their way as being a government-owned entity, their proposal would be considered favourably.

NALCO, a Navaratna CPSE which recorded the highest-ever turnover of Rs.11,386 crore with a net profit of Rs.1,732 crore in 2018-19, is contemplating setting up a 1.4 million-2 million tonne greenfield refinery with associated facilities with an investment ranging from Rs.7,000 crore to Rs.12,000 crore in Visakhapatnam area.