Ashapura Minechem to invest Rs 3k crore in Gujarat refinery

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Ashapura Minechem will now be able to resume the sale and export of its mined bauxite from Gujarat. In an interview with CNBC-TV18, Chetan Shah, Managing Director of the company, spoke about it in detail.

Here is a verbatim transcript of an exclusive interview with Chetan Shah on CNBC-TV18. Also watch the accompanying video.

Q: What is the contribution you get from bauxite? I believe you are going to set up an alumina refinery. How long do these exports matter go from this point?

A: Before the export was stopped by Gujarat government, 60% of the revenue was from bauxite and 40% from the other mining business. Now the government of Gujarat has already announced the new bauxite export policy and is looking at that polity. We expect some impact in our current financial year. However, there will be a better impact in the next financial year.

Q: To get a perspective of pricing in terms of bauxite exports, can you tell us what price are you selling bauxite at right now and what was the price three months ago?

A: The current price is much better than the price which was three months back. It is up by about 10-15%. There is a good demand of bauxite in the market. However, the freight is another important issue for us because the freight market has simultaneously moved up. We are seeing a good demand there and we can see good revenue generations out of it. It would definitely be better than what it was in July and August. The market has now improved towards North.

Q: You had revenues worth Rs 230 crore in the second quarter. After the bauxite issue is sorted out, how much do you expect your revenues to improve?

A: It is not going to have much of an impact on it till the third quarter. For the fourth quarter, we expect the revenue to be improved at least by 20-25%.

Q: Can you update us on the upcoming refinery? Is Rs 3,000 crore expenditure in place or are you coming to the market?

A: We are coming to the market. This project was awarded to us two years back. There was again the change in the bauxite export and mining policy by the state government. Now everything is cleared in the last week. It looks positive because the policy itself says that there are two refineries to come into Gujarat. Gujarat government has to make sure that enough bauxite should be available. However, we are yet to plan for the funds tie-up and are looking for a better partner for this project.

Q: Is Gujarat Mineral Development Corporation (GDMC) putting in money?

A: GMDC is going to be there but it can put upto 26%, which is the maximum level. Hence, they will put about 10-11% and 90% would be between Ashapura and some other partners. We are in talks with a few companies. Hopefully, we will finalize everything before end of December.