Gujarat Sme Bauxite Units Facing Survival Threat

SME bauxite units in Gujarat are left in a quandary with the implementation of the

new government resolution (GR), according to which, small bauxite units would no longer be given mining lease of the mineral. Under the new resolution, the government has kept the mining lease for the mineral reserved for a state-run public sector undertaking (PSU).

The resolution has the small-scale bauxite units in Gujarat up in arms as they fear that they might have to close down their units if the mining lease is set aside only for the Gujarat Mineral Development Corporation (GMDC).

Future in question

The Gujarat government has reserved the mining lease rights of all the bauxite mines for GMDC, excluding areas that have already been granted licence or mining lease. This has put a question mark on the fate of 200-odd small bauxite players in the region, which are solely dependent on the mining lease for meeting their requirements.

With the sole trading right of the mineral being given to the GMDC, small industries, involved in calcined bauxite production spread across Gujarat, will have difficulty in sourcing the mineral. This is likely to adversely affect the growth of the mining industry in the state, said Sailesh Raichura, executive director of Saurashtra Calcined Bauxite & Allied Industries Ltd based in Porbandar, Gujarat.

However, as per the provision of the GR, mining lease will be given to other players too, who are willing to establish units in Gujarat for producing other value-added products from plant grade as well as non-plant grade bauxite. Although this condition may provide some respite to small bauxite units with robust financial records, the ones with limited access to finance are likely to suffer.

Only a few small bauxite units in Gujarat possess considerable capacities and financial support that can help them take up upgradation for value-added products from plant grade as well as non-plant grade bauxite. However, the other units would possibly have to shut down, said Paresh Parikh, proprietor of Infinite Microns & Minerals Private Limited in Vadodara, Gujarat.

Although the GR was proposed by the Gujarat government with the objective of curbing illegal mining activities that have become rampant in the state for some years now, it is likely to do more damage to small businesses than good.

by: David Parks

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