As India Ponders Ban on Bauxite Exports, a Deeper Malaise Lurks

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To the casual observer, India’s seemingly constant battle between metals companies on the one side and farmers and tribal peoples on the other over the extraction of ores and development of downstream processing facilities appears like an open-and-shut case of bureaucratic incompetence.

Certainly bureaucracy in India always has a part to play in delays and cost overruns, but land use in India is a much more complicated problem than it may first appear.

On the face of it, Vedanta’s call for a ban on bauxite exports sounds rather like the steel industry’s calls last year for a ban on iron ore exports — merely an attempt to remove the necessity for alumina and aluminum producers to compete with international clients for supplies.

But one can have sympathy with the London-listed metals group.

According to Reuters, Vedanta’s alumina refinery in India’s eastern Odisha state has been operating at 70 percent of its 1 million ton-per-year production capacity because it cannot obtain its requirement of 10,000 tons of bauxite a day.

Yet India, which is the world’s fifth-biggest bauxite producer, has been limiting the issuance of bauxite leases mainly due to local protests over land acquisition. Eastern Odisha state has the largest reserve of the resource running into billions of tons.

Maybe one could be excused for thinking this is just a case of minority groups having too much power, or of luddites standing in the way of progress, but unfortunately they may have a point.

As the Lokayukta Report from July 2011 revealed, mineral extraction in India can be rife with corruption, involve appalling and irreversible environmental degradation, and serve in some cases to do no more than line the pockets of a tiny wealthy minority.

Iron ore exports were banned last year, not because the steel industry was aggrieved at having to compete with China for supplies (although no doubt they were), but because a few state officials who also owned mining companies (or maybe we should say ‘miners who had also got themselves into state governments’) were fleecing the state, the local population and future generations on a massive scale.

Continued in Part Two.

 

Comment (1)

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