Govt mulls amendments in pricing structure to decide ASP of bauxite

NEW DELHI: The government is considering changes in the pricing structure to ascertain the Average Selling Price (ASP) of metallurgical grade bauxite in order to attract private players in the sector.

At present, states are not able to auction the existing bauxite mines as companies find the selling price of the mineral unviable.

Bauxite is the principal ore of aluminum and therefore the mineral is the essential raw material for aluminium producers.

The change in calculation would be made through amendment in the mining law and the mines ministry has invited suggestions for the same, according to an official note.

A number of companies and industry associations have sought to revise the conversion factor to obtain the Average Selling Price for metallurgical grade bauxite.

The representations said that the ASP reached through the present conversion factor was very high when compared to actual price of bauxite, the ministry said in a note for consultation on the proposed changes.

On account of repeated representation, the mines ministry referred the issue to a panel that was constituted for developing a national mineral index.

“Based on the report of the committee, it is proposed to revise the conversion factor

At present, states are not able to auction existing bauxite mines as companies find the selling price of the mineral unviable. Bauxite is the principal ore of aluminum & therefore the mineral is the essential raw material for aluminium producers

to arrive at the ASP for metallurgical grade bauxite on the basis of LME (London Metal Exchange) price of aluminium for the financial year 202021 after factoring the logistics cost in taking the ore from the mine to the plant and the contribution towards royalty, DMF (District Mineral Foundation) and NMET (National Mineral Exploration Trust).

“Accordingly, it is proposed to notify the revised conversion factor as 4.23 per cent,” the ministry said, adding that the move will rationalise the calculation of Average Selling Price for metallurgical grade bauxite.

Also, necessary changes would be made in the mineral concession rules “to provide that whenever the conversion factor is revised, the revised conversion factor would be applicable for all the MLs, whether auctioned before or after the revision of the conversion factor, for the minerals removed or consumed from the leased area after such revision,” the ministry said.

The government has floated tenders for 14 bauxite mines in the current fiscal, of them 12 have been carried forward from FY22.

The auction of two bauxite blocks have been annulled in FY23 so far.