The state government of Andhra Pradesh in India is considering buying UAE’s Ras-Al-Khaimah Investment Authority’s (Rakia) stake in the Anrak Aluminium project. This is being looked at as a way to resolve the arbitration proceedings by Rakia over supply of bauxite to the refinery in Visakhapatnam district.
AAL is a joint venture between Penna Group and Rakia. Other options like obtaining refund from AP Mineral Development Corporation (APMDC), supplying bauxite to Anrak’s Aluminium refinery, or an ‘out of court’ settlement with the UAE entity is being considered.
Andhra Pradesh has over 600mn mt of bauxite reserves in the Eastern Ghats, accounting for 22pc of India’s bauxite reserves. Its neighbouring state, Odisha has over 2,000mn mt. The primary aluminium manufacturing companies like Nalco and Hindalco mine bauxite in Odisha.
In 2007, the then undivided Andhra Pradesh had inked a government-to-government (G2G) settlement with UAE’s state-owned entity, agreeing to set up an alumina refinery and smelter by investing Rs60bn ($815.94mn) funds in addition to supplying bauxite from APMDC to the joint venture.
However, the current government cancelled the agreement, Rakia served an arbitration notice to Central and state governments about fulfilling the commitment or pay compensatory damage of $44.71mn.
Anrak had invested around Rs57.12 bn for an aluminium manufacturing facility that was to be ready March 2013.