Much of how the bauxite project came into being remains unknown though it is clear it must have involved a significant planning effort. As far as is known there was no tender process to accept bids for the investment, though discussions were held also with other companies (for example discussions with Nalco in Government of Andhra Pradesh, Industries and Commerce Department 2005b). It would have been difficult for members of the State government to initiate plans with the Congress party just returning to power unexpectedly after ten years in opposition, and an overall poor State government capacity seems to limit the possibility of people in the bureaucracy to initiate plans which by necessity combines technical, economic, political and legal aspects. The North Indian Jindal Group headquartered in Haryana, which until now has been almost exclusively into steel-making, does not have any major operations in Andhra Pradesh making it seem like a somewhat unexpected member of this bauxite alliance with the State government.
The bauxite alliance was able to plan and formalise its cooperation in a business agreement without public debate on a known issue of public concern and as far as is known without competitive tendering. But it was not able to change the policies which determine land transfer.
The 2005 agreement explicitly accepts the special land protection for tribal people as affirmed by the Samatha Judgement and calls for mining in the public sector. It even includes a reference to an old government order from 1975 to further justify why a public sector company should supply ore to the private investor:
Whereas, the State of Andhra Pradesh is having rich bauxite deposits in Visakhapatnam and East Godavari (E.G) Districts, consisting of about 550 million tonnes of metallurgical grade.
Keeping its importance in view, the GoAP have reserved the entire deposit bearing areas available in E.G. District and Visakhapatnam District through [Government Order] No. 999
… 25/10/1975 for exclusive exploitation by the public sector undertaking. Further, all these areas are falling under reserve forest as well as notified tribal areas. As per the AP Land Transfer Regulation 1959, transfer of these areas to non-tribals is prohibited. Further the Hon'ble [sic.] Supreme Court of India in Samatha Vs State of AP case gave ruling that the State-owned Corporation can mine these areas and in case State owned Corporations are involved in mining, it does not amount to transfer of the areas to non-tribal. Considering these facts, GoAP is looking after a highly competent and financially sound entrepreneur who can establish value-added industry to produce end-products, based on these valuables, mined by APMDC Ltd. (MoU between GoAP and JSW 2005, 1).
The MoU specifies which deposits will be mined by the State government company APMDC (Andhra Pradesh Mineral Development Corporation), with ore sufficient for about 30 years of alumina refining:
GoAP shall direct APMDC to supply bauxite from out of the areas applied by them in Araku (Galikonda, Raktakonda & Chittamgondi) & Sapparla Groups, consisting of approx. 2446 ha.
and containing approximately 240 million tonnes of bauxite ore … (MoU between GoAP and JSW 2005, 2-3).
The MoU further details that the refinery of the private investor has to be located outside of the Scheduled Areas to avoid the land transfer law:
JSWHL62or its subsidiaries undertake to incorporate and promote a company … which will set up a Alumina and Aluminum refinery and Smelter to produce about 2.5 lakh tonnes63of Aluminium per annum initially, with a provision for suitable expansion, in the State of A P. at the locations other than the scheduled areas mutually agreed to by the two parties and with a capital outlay of about Rs 9.000 crores64(MoU between GoAP and JSW 2005, 2).
The setup presents itself as an advanced workaround to the problem of how to get private investment in bauxite industry. The proposed operations may seem to be according to the law since the government is allowed to mine in the Scheduled Areas, and the refinery will be built on non-Scheduled land. But the terms of the proposed cooperation are crucial since the AP land transfer regulation not only prevents direct ownership by a non-tribal, but also so called benami operations which are in the name of a tribal but for the benefit of a non-tribal, in this case a private company.
The MoU contains no detailed discussion about the benefits of the proposed project in order to determine where the actual benefits from it lie, or indeed who is actually in planning, financing and carrying out the mining operations only allowed by the public sector. But a number of passages can be used to cast doubt over the public benefits, or indeed even the public involvement. For the bauxite project it was realised that APMDC would not be able to bear the costs involved and might also need the expertise of JSW to prepare plans. A few citations from the MoU are illustrative of this:
62Jindal South West Holding Limited. A new company was specially created for the bauxite project JSW Aluminium
63250,000 tons
JSWHL or its subsidiary company shall bear all the expenditure in preparation of mining plans, cost of afforestation, net present value being payable to the Forest Department etc (MoU between GoAP and JSW 2005, 3).
APMDC shall take the expertise of JSWHL or its subsidiary in preparing the feasibility reports, mining plans etc required for getting clearances from MoEF, Govt of India for further leases (Ibid., 3).
JSWHL/subsidiary shall provide machinery required for mining lo APMDC on hire basis.
The hire charges shall be fixed by a [government-appointed] Committee … (Ibid., 4).
JSWHL/subsidiary shall provide cost of infrastructure required for development of mines as fixed by the Committee constituted by GoAP … (Ibid., 4).
Apart from allocating the ore for the private investor the State government does have one specific role to play in the agreement, to acquire land on behalf of the company. This was made explicit in the MoU in the following way:
JSWHL or its subsidiary shall identify suitable land other than the land in scheduled areas.
The same will be acquired and handed over to JSWHL or its subsidiary company by GoAP/Collector. JSWHL or its subsidiary company would bear the cost (MoU between GoAP and JSW 2005, 3).
Despite the advanced legal setup, progress on the ground has been very slow compared to the envisaged three year implementation time. After two public environmental hearings for the alumina refinery, the plant has been approved and land acquired. The mines have into 2010 not yet been put through the environmental clearance process. A public hearing was announced in October 2009 but this was later cancelled for unknown reasons.
In February 2007 a second bauxite project was announced replicating the earlier setup. The partner in this project is ANRAK Aluminium, a company owned by the government of Raz Al Khaima of the United Arab Emirates. This project has not only moved much faster and overtaken the GoAP-JSW project, but has been described as an Andhra Pradesh Congress party project based on the earlier MoU ‘template’. Evidence towards this are somewhat tentative but a direct link exists between the AP State Congress party treasurer and the government of RAK with an investment in a cement plant in Raz Al Khaima a few years earlier (Government of Ras
Al Khaimah 2006). The same treasurer is now implicated as an investor in ANRAK together with other AP Congress politicians (Interview opposition MP, Hyderabad 27/2 2008; Interview NGO head, Visakhapatnam 7/2 2008). Late in 2009 after many years of negotiations it was announced that Nalco had been awarded the last group of deposits available in the State.