The ‘Make in India’ initiative aims to grow India’s domestic capability in manufacturing for its 1.4 billion residents. For aluminium, that means self-sufficiency and vertical integration across the entire value chain from bauxite to finished products. A persistent issue inhibiting success is India’s challenges in trying to develop its large domestic bauxite reserves to secure the required raw materials—over 30Mtpa of additional bauxite supply capacity may be required if proposed projects are realised.
India’s Realisation of Capacity
India has a history of constructing
projects and having to leave them idle due to basic input energy and raw
material limitations—examples include initial issues with the Jharsuguda II
smelter expansion, the Angul smelter expansion, inability of Lanjigarh to
utilise its full refinery’s capacity and the constructed but still idle Anrak
refinery.

After several years of sitting idle,
production capacity is now being more fully utilised, though domestic raw
material limitations still exist despite the country being endowed with the
ability to supply both bauxite and alumina. Sourcing bauxite to feed alumina
capacity has been a persistent issue, despite the country’s ample reserves.
It was only between 2014 and 2017 that
expansions at Vedanta’s Korba and Jharsuguda smelter completed their production
ramp up, with portions of capacity sitting idle for extended periods following
the completion of construction. The start-up of this unused capacity added
around 1Mtpa of primary aluminium to India’s domestic production, along with
increasing alumina demand by 2Mtpa. The government is also increasingly trying
to promote vertical integration, with the proposal of industrial parks to
capture synergies between upstream aluminium production and downstream value adding.
Looking forward, Vedanta has plans to
further expand its Jharsuguda aluminium smelter, and state-owned National
Aluminium Company (Nalco) has been assessing an expansion of its 0.49Mtpa Angul
smelter, previously planned as a greenfield development at Sundargarh, as well
as being requested to plan an increase in its domestic primary metal production
up to 2Mtpa from the current 0.49Mtpa.
Having flagged expansion plans for an
extended period of time, in 2021, Vedanta announced it was committing to
spending US$300m through the year towards expanding Lanjigarh to 5Mtpa capacity
and increase its smelting capacity to 3Mtpa.
Improvements in Alumina
India currently produces a surplus of
metallurgical alumina to its smelter needs. Further, a level of discontent within
a government focussed on improving domestic growth and rationalising imports,
is the fact that Nalco often exports metallurgical alumina surplus to its own
needs from the 2.3Mtpa Damanjodi refinery onto the seaborne market whilst,
other domestic smelters, primarily Vedanta’s Jharsuguda smelter, are importing
the feedstock from other countries. Nalco’s refusal to sell alumina to domestic
competitors has been challenged, by Vedanta—with some success—through the
courts.

Available alumina capacity in India is
not currently fully utilised by domestic smelter capacity, so while it makes
sense for the country to be a net exporter of alumina, on balance it should not
necessarily be having to import material at the same time. Vedanta’s Lanjigarh
refinery currently operates below capacity due to persistent bauxite sourcing
limitations—which have more recently started being overcome—which has forced
the company to source alumina from third parties for its smelting operations
and delaying planned refinery expansion.
Hindalco is relatively self-sufficient,
with its refinery supply, other than the 1.5Mtpa Utkal operation, sourcing
bauxite from small, dispersed mining operations. The 1.5Mt Anrak refinery in
Andhra Pradesh has sat idle after completion of its construction in 2013 due to
the bauxite lease associated with the refinery being suspended. Inability to
secure bauxite supplies has also been a factor in delaying development of the long-proposed
Raykal JV refinery project of Larsen & Toubro (L&T) in Odisha.
To fully realise its spare, planned and
proposed alumina capacity, India would require over around 30Mtpa of bauxite
production capacity from its existing level. While they have reserves to
significantly contribute to this, large bauxite mine prospects have faced
several roadblocks to successful completion.

Bauxite in Abundance
According to the USGS, India has the 8th
largest global reserves with over 650Mt bauxite—though this includes a
significant amount of non-metallurgical grade. Large Indian bauxite deposits
are located primarily in Odisha state, the formation of the Eastern Ghats
ranges has resulted in hill-capping deposits containing significant resources.
Outside the Eastern Ghats formation in Odisha extending into Andhra Pradesh
state, bauxite generally occurs as smaller lensoidal deposits.
India is the world’s fifth largest
bauxite producer with a total production of around 25Mtpa. It is telling that
nearly half of this comes from just two mines in Odisha state—Nalco’s 7.2Mtpa
Panchpatmali (supplying Damanjodi refinery) and Hindalco’s 4.2Mtpa Baphlimali
(supplying Utkal refinery).
Generally, other refinery operations
such as Muri, Belgaum, Renukoot and Lanjigarh source bauxite from many smaller
operations and face potential supply security issues which are compounded by
India’s internal transportation networks. In terms of scale, India has over 300
active bauxite mining leases with many producing <50ktpa using
semi-mechanised or manual methods to produce both metallurgical and
non-metallurgical bauxites, along with further unregulated and illegal
operations.

Difficulty Developing Mines
Recent successful lease alocations over significant
resources include Pottangi (76Mt to Nalco) and Kodingamali (85Mt to OMC for
Vedanta) which are now progressing to development. The Sijurumali/Kuturumali
(250Mt) deposit had also been allocated to the Raykal JV, with Vedanta as joint
venture partner with L&T although lease conditions are believed to still require
a greenfield refinery development and is preventing Vedanta securing its share
of the resource for feeding its Lanjigarh refinery.
Significant hurdles have limited the development of
other large bauxite mines in India. Surprisingly, while internal Indian transport
networks are basic, road infrastructure has been less of a factor in supply
insecurity than local opposition to development and lease allocation
inconsistencies.

Cancellation of bauxite leases over the last few years
have occurred as part of a process addressing previously undertaken improper
lease allocation processes. For Andhra Pradesh’s Anrak refinery development,
the revoking of an associated mining lease for the Jerrala deposit due to
improper allocation by a previous state government has been a major factor in
the delay to starting up the already constructed project. The ongoing auction
and re-allocation process occurring to increase transparency and surety of
tenure will hopefully improve confidence going forward.
Additionally, several significant bauxite deposits
have been delayed or refused development due to local opposition citing
protected forest or tribal areas, along with agitation from political elements.
Examples include the Jerrala (250Mt) deposit in Andhra Pradesh, the
Gandhamardan (300Mt) and Niyamgiri (75Mt) deposits in Odisha state. These
resources had been previously allocated, but mining operations have not been
established due to environmental concerns and/or local resistance.
Niyamgiri is
a significant recent case, with the Odisha state government supporting
Vedanta’s plans to mine the deposit to supply its already constructed Lanjigarh
refinery, however the mine project was rejected by the national supreme court
who ruled in favour of preserving the tribal lands of the Dongria Khond. This
kind of issue will continue to be factored into ongoing attempts to develop
bauxite whose location intersects tribal lands in India—particularly across
Andhra Pradesh and Odisha where Maoist groups also opposing development
alongside the tribal communities.