After the failure at Niyamgiri, Vedanta is eyeing the bauxite mine at Amarkantak

With more than half the gram sabhas in Orissa's Rayagada and Kalahandi districts opposing bauxite mining in the Niyamgiri hills, Vedanta Aluminium Ltd is working on a two-pronged back-up plan to source the key raw material.

The company is understood to have identified 25-26 small closed mines owned by private miners, and has requested that it be given the lease to mine from them. In particular, it has zeroed in on the bauxite mine at Amarkantak in Rayagada district close to Niyamgiri. Alternatively, it has suggested the state government hand over these mines to the Orissa Mining Corporation (OMC).

The company believes the state is obliged to provide other sites to OMC since Vedanta's MoU with OMC is for the supply of 150 million tonnes of bauxite, of which only 70 mt was to be supplied from the Niyamgiri Hills. "For the remaining 80 mt, OMC had to be given other sites," a source in the know of the developments said.

A state government appointed inter-ministerial group recently submitted its report on providing mineral linkages and the company is hopeful that its recommendations would be industry-friendly.

In the meantime, Vedanta must source bauxite from Gujarat, Chhattisgarh and Andhra Pradesh. It recently started its alumina plant at Lanjigarh, for which it is sourcing bauxite from Gujarat and is operating at 50% capacity. However, while the per-tonne cost of bauxite sourced from Orissa is R500-600, when transported from Gujarat it goes up to R2,800-2,900 per tonne. Officials said costs could increase because state governments sell the mineral through e-auctions.

Vedanta operates a 0.5 mtpa aluminium plant at Jharsuguda in Orissa, for which it needs 1 mtpa of alumina at Lanjigarh. To make alumina there, it needs 3 mtpa of bauxite, which it planned to source from OMC which had a lease to mine the same in Niyamgiri.