KASHIPUR (RAYAGADA): The last rains of the monsoon have added layers of green to the rolling hills of the Eastern Ghats. The meandering roads make the drive into Kashipur, the block headquarters town, a seamlessly easy one. There on, as the vehicle veers towards villages located on the foothills of Sijimali, the ease of travel slowly gives way to edginess as watchful eyes follow you everywhere. Small groups of youths, parked on bikes by the road, pull out their mobile phones and put them to swift use at the very sight of a stranger. They even tail the vehicle quietly. They are what the natives of Kantamaal and Aliguna call ‘agents of the company’. At some points of entry and exit to the villages, men in camouflage do appear. Then, there are the occasional checks by policemen out on ‘patrol.’
Up ahead, Sijimali is a flat-topped hill that runs as part of the East Coast Bauxite belt, one of India’s richest repositories of the primary ore of aluminium which is attracting investors in droves to a state keen to make its mark as the country’s top industrial destination. It is in this region the undercurrent of unease is palpable and there is a history to it too.
Vedanta Ltd which was declared the preferred bidder for Sijimali bauxite block in February would know, for it brings a sense of deja vu. It has been 10 years since the aluminium giant’s search for bauxite through state PSU Odisha Mining Corporation (OMC) lost out to the power of the gram sabha in a famous legal battle that recognised the particularly vulnerable tribal group Dongria Kondh’s religious rights under Forest Rights Act at Niyamgiri hills.
India’s biggest aluminium producer is back again and ready for its second coming as it braces up for the mandatory public hearing for environment clearance in Rayagada on October 16. The Sijimali block is crucial for Vedanta which has a 2 million (mn) tonne per annum alumina refinery at Lanjigarh and two smelting plants at Jharsuguda and Korba (in neighbouring Chhattisgarh) with a combined capacity of 2.2 mn tonne.
Vedanta’s stakes are high. After its Niyamgiri mining project plans did not work out, the company had to source bauxite through a long term linkage plan with OMC besides depending on imports. Sijimali, bid with a 112 per cent premium price, has a 311 mn tonne reserve which could easily serve it for 30 years.
FUTURE OUTLOOK
But it is not the only corporate giant with bauxite interests in the state. The future outlook of aluminium driving the demand for the metal grade ore found abundantly in this part of the country is drawing others too. Engineering sector, electronics, infrastructure, automotive, transportation, packaging industry, aviation, aerospace as well as defence sectors are sending the country’s aluminium demand upwards.
As per a CRISIL study, strong demand will push capital expenditure in aluminium by three times over the next five years. “Solid long-term demand fundamentals and expectation of healthy operating margins will spur domestic aluminium makers to spend Rs 70,000 crore in the next five years through 2027 to expand capacity. This capital expenditure would be thrice that was incurred in the past five years,” predicts the financial advisory agency.
Tapan Kumar Chand, resident director of Vedanta Ltd in Odisha and Chhattisgarh, agrees. According to him, aluminium consumption will double in the country in the next five years and the price of the white metal will remain stable going forward.
What’s also being watched out for is international prices of the white metal. Aluminium price in London Metal Exchange had hit $4,000 in 2022 after reopening of economies following Covid restrictions but has since fallen and steadied at $2,200-2,300 which international agencies predict may stabilise. Some even predict an appreciation in the prices based on international market dynamics and geopolitics.
With the outlook looking strong and domestic consumption set for a steady growth, aluminium makers seem bullish and Odisha is at the centre of attraction and interest because of its bauxite riches. Between 2015 and October 2023, as many as 31 bauxite mines have been successfully auctioned across six states of the country, as per Union Mines Ministry data. Three of them are from Odisha. Auctioned this year, the three blocks combined together bear reserves to the tune of about 460 mn tonne. The rest 28 come nowhere near.
GEOLOGICAL ADVANTAGE
As per the Indian Minerals Yearbook 2021, Odisha accounts for 41 per cent of the bauxite resources in the country, followed by Chhattisgarh and Andhra Pradesh (AP). Much of the reserves are found in the Eastern Ghats branching across Odisha into the AP. This East Coast Bauxite belt is where the blocks are located, almost next to each other.
The geographical distribution of the belt would show much of the resources are concentrated in Rayagada, Koraput and Kalahandi districts. This is where the big industries are willing to consolidate their position through acquisition of mines, establishing greenfield ventures and focussing on expansion.
CONSOLIDATION RACE
Vedanta, whose investment exposure in the state stands around Rs 80,000 crore, had announced last year to push another Rs 25,000 crore towards capacity expansion across metals and mining sectors. The company looks to scale up its alumina refinery capacity to 6 mn tonne a year.
Aditya Birla Group’s Hindalco Industries Ltd is expanding its footprints too. Having over Rs 30,000 crore investment in the state, Hindalco’s Utkal Alumina International Ltd runs a 2.37 mn tonne alumina refinery in Rayagada district. It was one of the first private companies to get a captive bauxite mine in the state and had to navigate through resistance in early 2000s. The 200 mn tonne Baphlimali mine allocated to it is located over the same two adjoining districts of Kalahandi and Rayagada and the annual extraction stands at 7 mn tonne.
Earlier this month, Hindalco was engaged in a long negotiation with the state government for securing bauxite linkage from OMC’s Kodingamali mines after the state government revised its Long Term Linkage Policy 2023. As per the pact, beginning 2026-27, the company would be eligible for 0.6 mn tonne per annum bauxite supply for the first two years. From 2028-29 onwards, its off-take would be substantially higher at 3.6 mn tonne per annum.
To smoothen the deal, the company has gone on to sign an MoU with the Odisha government for a second refinery in Rayagada district at Kansariguda with a proposed investment of over Rs 8,000 crore. It would add another 2 mn tonne to the company’s refinery capacity along with a 150 mega watt captive power plant.The company has two smelters in Lapanga and Hirakud (both in Sambalpur) with a combined capacity of over 610,000 tonne per year apart from captive power plants. If sources are to be believed, it is planning more downstream product units in Rayagada.
Not to be left behind, the Adani Group has joined the aluminium bandwagon in the state. Its two-year-old wholly-owned subsidiary, Mundra Aluminium Ltd emerged preferred bidder in two blocks – Kutrumali and Ballada. Ballada in Koraput district comes with a smaller reserve of 22 mn tonne while Kutrumali, standing shoulder to shoulder with Sijimali in the same bauxite belt, has a deposit of 127 mn tonne, spread over 701.7 hectare. It is planning a greenfield project too.
Rich in resources, the East Coast Bauxite belt is also part of the biodiversity hotspot that Eastern Ghats happens to be. It also is home to tribal communities who share an intimate bond with their land that goes well beyond the need for natural resources. The Dongria Kondhs, one of the many particularly vulnerable tribal groups, had stood up against the Vedanta Ltd seeking religious rights over Niyam Raja.
THE CHASM
Echoes of that resistance still ring in the region because the proposed Sijimali mining site falls in 18 revenue villages across Rayagada’s Kashipur and neighbouring Kalahandi’s Thuamul Rampur block. Once Vedanta was issued the letter of intent for the block, there was a bevy of on-ground activities by Mythri Infrastructure and Mining India Pvt Ltd, a firm which awarded the task of operating the mines.
On the Rayagada side, there have been face-offs. On August 12, Kashipur police lodged an FIR against 93 people basing on a complaint from Mythri Infrastructure which alleged its team members along with police were stopped by some inhabitants of Kantamal, Banteji, Bundel, Aliguna and many other villages on Sijimali hill top. They were threatened with life and even held hostage, the FIR said.
Villagers say it is their resistance to loss of land, resources and livelihood which is attracting fabricated police cases. “A villager who works in Kerala for a living was booked. In one case, police came looking for a person who passed away about five years ago,” alleges Gobardhan Majhi of Kantamal village.
According to Rayagada SP Vivekanand Sharma, a series of incidents such as kidnapping and law and order violations took place in Kashipur. “We had to register cases and take action to prevent the matter from escalation,” he said.
Six days prior to that, an FIR was registered against nine persons after a mob gheraoed K Singhpur police station over the arrest of a person in a case related to alleged Maoist violence. Police later reviewed the matter and dropped the charges slapped under the Unlawful Activities Prevention Act.
As the public hearing dates draw close, a sense of tension prevails in the area. However, the Rayagada administration says it is committed to ensure residents of villages set to be impacted by mining get to voice their concerns in a free and fair manner. “Much of the unrest is motivated by vested interest groups because it started after the auction ended,” says Rayagada collector Swadha Dev Singh.
The whole process for the mining project, she says, will begin with the public hearing and would take about 24 months since environment as well as social impact would also be assessed subsequently. “The public hearing will be conducted in the most legal manner and recorded which means villagers from the impacted areas will be able to air their views freely,” she assures.