BackHindalco’s five Jharkhand bauxite mines closed
The move is part of the centre's drive to shut mines that are functioning on deemed or temporary leases
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Mumbai: Five of Hindalco Industries Ltd’s bauxite mines in Jharkhand have been closed since 10 September as part of the central government’s drive to shut mines functioning on deemed or temporary leases, a district mining official said on Monday.
“Hindalco and its subsidiary, Minerals and Minerals Ltd, have nine bauxite mines; I have got five of them closed," said D.N. Singh, district mining officer of Lohardaga in Jharkhand.
“The letter for closure came on 8 September and this was in accordance with the central government’s amendment of the Mines and Minerals (Development and Regulation) Act in July, which says mines running on deemed leases must close," Singh added.
The closed mines are Hisri Old, Hisri New, Bhusar Kekrang, Bagdu Bhusar which belong to Hindalco, and Pakhar which belongs to Minerals and Minerals.
There are two other running mines also in Pakhar and two that are exhausted, Singh added.
Hindalco’s spokesperson said the company did not want to comment.
An analyst said the closures will add to a scarcity of bauxite for the company, which is expanding its aluminium capacity to 1.3 million tonnes (mt) in order to capture markets in India and overseas.
“These five mines accounted for 45% of Hindalco’s 2.23 mt bauxite production in Jharkhand," said Ritesh Shah, materials analyst at Espirito Santo Securities India Pvt. Ltd. “Hindalco’s problems don’t stop here; its Maliparbat bauxite mine in Odisha was closed on 29 August. Consequently, 35% of Hindalco’s stand-alone bauxite sourcing is currently shut."
Another analyst said there was a chance the mines could be reopened.
“Looking at what the Odisha government did to reopen the mines of some large companies in a similar case, it is likely that similar express orders could be given out by the Jharkhand government as well," said Giriraj Daga, senior analyst at Nirmal Bang Equities Pvt. Ltd. “It may take about a month."
Daga said, usually, companies operate with stocks of 10-15 days, but in Hindalco’s case, the company had not given any details on this.
In case the mines continue to remain closed, 3-4% could get shaved off from Hindalco’s estimated stand-alone FY15 earnings before interest, taxes, depreciation and amortization (Ebitda) of ₹ 3,500-3,800 crore, Daga added.
Hindalco closed at ₹ 163.40 on BSE on Monday, down 3.1% from its previous close, but up 45.5% from a year ago.
The exchange’s benchmark Sensex lost 0.90% to close at 26,816.56 points.
Hindalco has invested around $5 billion over the last five years in new projects—Mahan Aluminium smelter in Madhya Pradesh and Utkal Alumina Refinery and Aditya Aluminium smelter in Odisha.
Hindalco’s capacity is set to touch 1.3 mt, compared with 513,500 tonnes two years ago, according to data from the company and the mines ministry.
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