Bhubaneswar: The state government on Wednesday came out with a policy to provide long-term bauxite ore linkage to the aluminium industry.

The move will benefit, among others, the Vedanta Group, which has a one million tonne alumina refinery at Lanjigarh and an 1.75 million tonne aluminium smelter at Jharsuguda.

"The Vedanta Group, which had a longstanding problem over the bauxite ore supply, will get the long-term linkage for its plants," said chief secretary Aditya Prasad Padhi, while briefing reporters about the cabinet decision on the long-term bauxite ore linkage policy.

A state government press note said: "The decisions of the cabinet will enable the Vedanta Limited to purchase bauxite from the state-run Odisha Mining Corporation (OMC) on a long-term basis at market price arrived at through auction in a transparent manner, besides expediting the exploration and auction of more bauxite blocks in the mineral rich state of Odisha."

The Vedanta Group chairman Anil Agrawal had been frequently meeting chief minister Naveen Patnaik and top officials for supply of bauxite ore to its plants in the state. As the company does not have any bauxite mine in Odisha, it had to outsource it to run its projects in the state. The group had even threatened to close down its plants for lack of bauxite.

A committee had constituted under Padhi to recommend modalities to Odisha Mining Corporation for supply of bauxite to Lanjigarh. The cabinet on Wednesday accepted the recommendations of the committee.

The cabinet, which approved the draft long-term bauxite ore linkage policy, noted that though Odisha had bauxite reserves of 1968.862 million tonnes, the annual production was only about 9.2 million tonnes. Therefore, the government decided that the bauxite blocks would be provided to the aluminium industries through long-term linkage and auction route.

According to the new policy, 70 per cent saleable stock of bauxite will be made available for long-term linkage and the remaining thirty per cent will be sold through national e-auction.

The floor price for the national e-auction will be kept at cost of production plus 50 per cent profit margin, the policy states.

The cabinet also decided that more bauxite blocks would be explored through outsourcing by the steel and mines department. The state-run Odisha Mining Corporation will expedite the statutory clearances for the blocks assigned to it. Wherever the progress is not satisfactory, these blocks may be surrendered and auctioned for exploration by the state government.