Govt may tweak bauxite pricing mechanism

Revised conversion factor would apply to new mining leases granted following the notification

- NITIN KUMAR

The Ministry of Mines has proposed revising the conversion factor used in calculating the Average Sale Price (ASP) for metallurgical grade bauxite, a critical component in the auction process for bauxite blocks.

ASP, which determines the value of estimated resources and the premium payable by auction winners, currently uses a conversion factor of 6.4 per cent based on the London Metal Exchange (LME) aluminium price.

However, after multiple industry representations and legal challenges, the ministry has recommended reducing this factor to 4.9 per cent to better align with actual bauxite costs. To achieve this, the government has removed average logistic cost.

Metallurgical grade bauxite is a type of bauxite specifically used for producing aluminium. It has a high concentration of aluminium oxide (Al2O3), which makes it suitable for refining into alumina and then further processing into aluminium metal. This grade is primarily used in industries such as automotive, construction, packaging, and aerospace that rely on aluminium.