Industry Info

Legal experts favour L&T, Vedanta JV on bauxite mining

Odisha govt dilly dallying over grant of mining lease to global engineering giant L&T

Vedanta’s bid to secure alternate bauxite supply for its Lanjigarh refinery through a joint venture with L & T has received shot in the arm with several legal luminaries ruling out any legal hurdle in realisation of the proposal.

Vedanta had entered into JV with L&T, which held prospecting licence for Sijimali and Kutrumali mines in south Odisha's Rayagada and Kalahandi districts.

The state government, however, is dilly dallying over the grant of mining lease (ML) to global engineering giant L&T that had won prospecting license (PL) over the twin bauxite deposits with reserves of close to 300 million tonne.

This is despite legal opinions in favour of L&T by the government's Supreme Court counsel Uday U Lalit, state’s advocate general, Ashok Mohanty and noted legal expert and former attorney general Soli Sorabjee, whose views were sought by the government on the issue.

Lalit has opined that L&T has a preferential right to be granted ML as per provisions of the Mines and Minerals (Development & Regulation) Act-1957.

“A plain reading of the provisions of Section 11 (1) of MMDR Act leads to the irresistible conclusion that the applicant (L&T) being a PL holder and having completed the prospecting operations without committed any breach of any of the conditions, has a preferential right for the grant of ML”, Lalit said in his views submitted to the state government.

The counsel has clarified that long-term supplies to Vedanta's refinery from the two bauxite deposits is legally permissible.

“If the state government were to allow the applicant (L&T) to supply bauxite to Vedanta Aluminium Ltd (VAL), in my opinion, it would be permissible. Long-term ore linkages have also been recognized as one of the criteria for consideration of the bids for grant of PL in the draft MMDR Bill, 2011. If the state government, in principle, accepts that the said arrangement is in public interest, the state government, may incorporate further conditions in the grant of ML itself, so that the mineral deposits are supplied to VAL, utilized within the state and result in value addition to the state”, Lalit added.

Earlier, Sorabjee and Mohanty expressed similar opinions.

Steel & mines minister Rajanikant Singh and secretary G Srinivas could not be reached for comments. S K Popli, special secretary (steel & mines) denied any knowledge of the matter.

Director (mines) Deepak Mohanty said, “The Supreme Court counsel has submitted his views on the L&T bauxite lease case. But I am not aware of any development since the matter is being dealt at the government level.”The state government is understood to be acting with caution after the recent drubbing to bauxite mining atop the ecologically fragile Niyamgiri hills by the 12 gram sabhas. Vedanta's hope to source bauxite from these hills is almost sealed though a final decision is still awaited from the Union ministry of environment & forests (MoEF).

Grant of ML to L&T which promises bauxite supplies to Vedanta Aluminium Ltd's (VAL) Lanjigarh refinery could upset the ruling Biju Janata Dal's (BJD) vote bank equation with the tribals whose mood is against the Anil Agarwal controlled firm, feel industry observers.

This is especially at a time when the elections are barely a few months away and the Opposition Congress is playing the tribal card.

L&T had won PL for Sijimali and Kutrumali bauxite mines in 1992. But two years later after the expiry of PL, the state government denied ML to L&T since it had no end-use plant.

In 2005, L&T through a joint venture with Dubai Aluminium (Dubal) had proposed a Rs 30,000 crore alumina refinery of three million tonne per annum (mtpa) capacity at Rayagada, 1.5 mtpa smelter project and a captive power plant (CPP).

Though a special purpose vehicle (SPV) called Raykal Aluminium was formed for the purpose, the project remained a non-starter.

Seven years later in 2012 when Dubal walked out of the SPV, VAL bought 24 per cent stake in the project.

Source: Business Standard