Bauxite mines not being successfully auctioned leads to rise in import

In the past five years, since the inception of the MMDR Act 2015, no metallurgical grade bauxite mine has been successfully auctioned. This is largely linked to the unviable and arbitrary determination of average sale price (ASP) of the metallurgical grade of bauxite linked with the selling price of the end product aluminium.

This current pricing structure is responsible for the most part, for various state governments not being able to auction the bauxite mine leases. The current pricing structure links the selling price of the end-product (aluminium) to determine the ASP of metallurgical grade bauxite and ends up including costs such as transportation, quality control and rehandling cost, which should not be done. Bringing enough bauxite blocks of the estimated deposits of 3.8 billion tonnes in India into the auction and increasing the capacity of existing mines by at least 50 per cent will be key to moving India towards becoming Aatmanirbhar Bharat or self-reliant India.

Another important change that is required is in the methodology of the calculation of the average sale price (ASP) of bauxite which if continued in its current form, will have a negative impact on the overall growth of the domestic aluminium industry. Bauxite mining creates livelihood opportunities in remote regions that otherwise have limited potential for other economic activities. A single developed mine potentially generates over 10,000 jobs and brings in over Rs 5,000 crore worth of state revenue. Modern, sustainable mining methods trigger socioeconomic development bringing remote regions into the economic mainstream. Hence, utilising India’s natural bauxite dividend needs to be a policy priority.