Despite these abundant bauxite reserves, there has been not a single successful auction of any metallurgical grade bauxite mine in the last five years by the State Governments, since inception of auction regime.
This has led to a surge in import of bauxite, one of India’s most abundant ores, to feed the rapidly increasing domestic consumption and has caused a loss of USD $400 million to the Indian exchequer.
The primary reason for various State Governments not being able to auction the bauxite mineral blocks is due to the present pricing structure which links the selling price of the end product to the back calculated method of determination of the Average Sale Price (ASP) of metallurgical grade bauxite without factoring transportation cost, thus eroding cost advantage of Indian bauxite and rendering alluminium production unviable in the country.This has also led to a pause in additional investment of over Rs 50,000 crore in the aluminium sector due to the futility of the current bauxite ASP determination methodology.
The need of the hour is increasing the production capacity of existing mines by at least 50 per cent, rationalising ASP of metallurgical grade bauxite in line with other bulk minerals and bringing bauxite mines into auction to meet the rapidly increasing domestic demand.