India just doesn't use its large mineral reserves
Though it is early days yet, with 3 of the 12 gram sabhas that are to be held to see if Vedanta Aluminium Ltd can be allowed to access the bauxite at Niyamgiri rejecting this outright, the company’s chances of victory are beginning to look a bit dim. But whether this means the company’s 1 million tonne refinery will have to shut down depends upon the Orissa government. While Niyamgiri has amongst the best bauxite reserves in the world, if the residents of the area decree that the bauxite mining will disturb their access to their God, Niyam Raja, Vedanta can just as well get bauxite from elsewhere in the state. Indeed, the company has already filed for over 20 more mining leases in other parts of the state. Orissa has around 2.5 billion tonnes of bauxite reserves, so there are many more mining sites that can be made available if need be. Indeed, while the Vedanta refinery had signed up to get 150 million tonnes of bauxite from the Orissa Mining Corp—the state-owned mining company has the mining lease—Niyamgiri was to supply only 80 million tonnes, the rest had to come from elsewhere. Which is why it is surprising that the Orissa government has not moved on this for so long. After all, while Vedanta can theoretically move to a new mining site, getting environmental clearances for this could take years as it did in the case of Niyamgiri; clearances are also subject to all manner of political considerations—it has to be a real coincidence for the then environment minister to deny clearance to Vedanta’s plans the day Congress scion Rahul Gandhi landed up in Niyamgiri to tell the tribals that he was their sipahi in the capital.
The larger issue, of course, is not about Vedanta or its $2 billion Lanjigarh refinery or the huge losses the company says it has suffered due to lost production. The issue is about how, despite having some of the world’s largest deposits of various minerals, India still imports so much of its mineral needs. After India allowed the private sector in oil exploration, Cairn India (also owned by Vedanta’s Anil Agarwal) produces around a fourth of India’s production of crude oil. When Agarwal bought the state-owned Hindustan Zinc, the company was producing 1.5 lakh tonnes of zinc with reserves of a few years being prognosticated—today, the production is 1.2 million tonnes and with estimated reserves of 30 years. In just a few years of prospecting, the Australian Rio Tinto has found more diamond-bearing sites than PSU mining firms did for decades. What India needs to debate is why, despite having such large reserves of minerals—with 3.5 billion tonnes of bauxite reserves, India produces just 1.5 million tonnes of aluminium as compared to China’s 20 million tonnes with no bauxite reserves—the country doesn’t have truly global-sized mineral companies.