UAE serves Indian govt arbitration notice for failing on bauxite supplies for Andhra alumina project

The UAE Ras Al-Khaimah Investment Authority (RAKIA) has served an arbitration notice to the Indian government seeking a hefty compensation of US$44.71 million for a bauxite and alumina supply agreement that was signed for a planned project in south India. The notice served mentioned the option for the Indian government to fulfil the supply agreement on an immediate basis. The arbitration sought by the UAE government through RAKIA falls under the existing Bilateral Investment Protection Agreement between India and UAE, stated a release by the India Mines Ministry.

The dispute between Indian government and RAKIA stemmed from the memorandum of understanding (MoU) that was inked between India's state government of Andhra Pradesh and the government of Ras Al-Khaimah, part of UAE, for the construction of an alumina refinery in the region. As per the memorandum, Andhra Pradesh Mineral Development Corporation (APMDC) was supposed to supply bauxite to Anrak Aluminium- a joint venture of RAKIA (70%) and India’s Pennar Group (30%). However, the southern state, in spite of being endowed with 3.4 billion tonnes (18% of India's total) bauxite reserves could not mobilise the resource for implementing the alumina project, the reason being rising environmental activism and violence in the state.


The Andhra government, in 2015, had given consent for bauxite mining across 1,212 hectare of forest land in the state. However, in the face of severe socio-political opposition, it had to revoke its decision within a few months. Since, then the Anrak Aluminium project has not made any progress whatsoever. The compensation amount claimed by RAKIA in the arbitration is equivalent to the investments made by the authority in the implementing company, ANRAK.

A total investment of about US$1.02-billion was planned for the alumina refinery project in Andhra.

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The uncertainties over bauxite mining and supplies have hurt the prospects of yet another planned aluminium project in the state. A $2-billion-worth aluminium project conceived by JSW Steel in 2007 also went into a limbo after the state government failed to arrange for steady bauxite supplies for the project.