Ranchi, Aug. 23: The state government and Hindalco Industries Ltd are at loggerheads over royalty, the ongoing tussle affecting smooth supply of bauxite ore to the Aditya Birla group company's plant in Ranchi.

In a notice issued in July, the state mines and geology department demanded Hindalco to pay a whopping sum of around Rs 22 crore as royalty against vanadium - a by-product generated while processing bauxite ore to produce alumina at its Muri plant in Ranchi district.

The department asked the company to pay an upfront amount of Rs 6.21 crore and give an undertaking on the rest of the amount - a prerequisite for renewal of lease for five bauxite mines in Lohardaga district.

Hindalco, on the other hand, is understood to have expressed its willingness to pay the "upfront amount" only after it gets the renewal for the concerned mines, triggering a dispute that may finally land in court. "Hindalco has been asked to pay Rs 6.21 crore. For the rest of the amount, they need to give an undertaking," principal secretary, state mines and geology department, Santosh Kumar Satpathy said.

Satpathy added that the department would consider renewal of lease for five captive mines - Bagru, Bhusur, Hirsi, Serengdag B and Pakhar (all in Lohardaga) - only if the company paid the upfront amount.

Sources claimed these mines had been closed since September last year when the mines and geology department imposed a ban on operations in areas, where the second or subsequent renewal was due.

Under the amended Mines and Minerals (Development and Regulation) Act, lease for captive mines would be extended till 2030, provided all terms and conditions were fulfilled, they added.

Officials at Hindalco claimed that the company had already been paying royalty on bauxite but now the mines department imposed royalty on vanadium sludge, which was produced while processing minerals, payable under Section 64C of the Mineral Concession Rules (MCR).

"We have been asked to pay around Rs 20-22 crore (royalty). But MCR does not prescribe any such thing," a Hindalco official claimed.

Principal secretary Satpathy, however, claimed that the notice of royalty against vanadium was sent to Hindalco by his predecessors.

"They will have to pay the amount else them must get a stay order (from any court)," he asserted.

Muri alumina plant, with a production capacity of 5 lakh tonne per annum, provides direct and indirect employment to around 4,000 people, most of who are local residents.

Apart from Lohardaga, Hindalco also has bauxite mines in Gumla district, which mainly cater to its unit in Renukoot of neighbouring Uttar Pradesh.