First Mega fast track project for Vizag

First Mega fast track project for Vizag

The Hindu, Santosh Patnaik

8 July 2005

Andhra Pradesh - Visakhapatnam - Whatever may be the ramifications, Visakhapatnam has been chosen for locating the first mega fast track aluminium project, cleared by the Congress Government headed by Y.S. Rajasekhara Reddy.

The investor community was caught unawares with the sudden signing of a memorandum of understanding (MoU) with the Jindal South West Holding Limited (JSWHL) for establishing a smelter and a refinery in the district with a mega investment of Rs.9,000 crores.

No project report

Ironically, the agreement was signed without preparing a detailed project report and zeroing in on probable sites for the smelter and the refinery.

According to an official of the Industries Department, the MoU is a major achievement in the wake of speculation that the much-hyped car unit by the German auto major, Volkswagen AG, is off.

Interestingly, Jindal Group has evinced a keen interest for a massive investment for the proposed smelter with an annual capacity for 2.5 lakh tonnes of alumina and the refinery with a capacity to produce 1.5 million tonnes of the metal.

Sources in the Jindal Group say that the take-off time will be three years and Andhra Pradesh Mineral Development Corporation will extract bauxite ores for the former from the mines identified in the hill ranges from Papikonda in East Godavari to Sileru and Krishnadevipeta in Visakhapatnam district.

Bauxite reserves

A preliminary survey conducted a decade ago had revealed that the hill ranges in the two districts have an estimated 700 million tonnes of bauxite.

The State Government considers the MoU as a major achievement as it came close on the heels of talks with the Centre-owned aluminium major, National Aluminium Company (Nalco), for a joint venture. Sources said that following doubts expressed by Nalco on the viability of the project due to opposition from local Girijan groups and NGOs, the Jindal Group agreed to foray into aluminium sector.

Jindals will not only get octroi, entry tax and other levy exemptions, but will also avail themselves of the opportunity to extend their synergies to a highly lucrative sector. The $4 billion group has proven its excellence in steel, power, minerals, mining, industrial gas and port facilities.

Prior to this development, the Dubal Alumina Company of Dubai had shown interest for massive investment by forming a consortium after an aerial and field survey in Chintapalli area during the Telugu Desam Party regime.

A non- starter

However, the project turned a non-starter following a hue and cry over the alleged violation of the Regulation 1 of 70 of the Andhra Tribal Land Transfer (Prevention) Act and the fears over the threat posed to the Girijan lifestyle and the eco-system of the Eastern Ghats.

Only time will say whether the Jindal project will take off within the three-year period as promised by the promoters or face rough weather.