NALCO plans smelter and power plant in Indonesia

KOLKATA: National Aluminium Company, (Nalco) has shortlisted Indonesia as the top country of choice for its maiden overseas venture. If all goes well, the state-owned aluminium major is planning to invest Rs 15,000 crore on setting up a greenfield aluminium smelter and power plant.

"We have held talks with a few countries in the Gulf region, besides Indonesia. But in terms of prospect, Indonesia is ahead of the others at this point," Nalco chairman and managing director C R Pradhan told ET.

The project envisages setting up a 5-lakh tonne smelter, with two streams of 2.5 lakh tonne each and a 1300 MW power plant. In the first stage, some Rs 8,000 crore will be spent on a 2.5 lakh tonne smelter and a 600 MW power project.

Nalco's overseas foray is linked to its plan to seek an alternative, cheaper source of fuel to convert its surplus alumina into aluminium. Fuel costs account for nearly 60% of the smelting charges and hence Nalco has been forced to look beyond Indian shores with its plans for setting up a new smelter.

"Indonesia is the only country which has come forward for the project. Gulf countries like Abu Dhabi, Oman, Dubai, Qatar and Iran have failed to provide any assurance of gas supply," he said. In the last one year, global aluminium majors like Alcoa and Alcan have raced ahead of Nalco to put up smelters in the Gulf region. Mired in public sector decision making, Nalco seems to have lost out in the race.

Mr Pradhan said the company was currently carrying out an internal feasibility study to finalise a plan for Indonesia. The union government has given Nalco a deadline of end-2006 to decide on the international foray. Nalco which in all probability will miss the deadline, has instead set March 2007 as an internal goalpost to firm up its plans.

"We will have a surplus of 1.2 million tonne of alumina by 2008, after our ongoing expansion plan is completed," Mr Pradhan said. As part of Nalco's Rs 4,091-crore expansion programme, alumina capacity is being enhanced to 2.1 million tonne from 1.6 million tonne, while aluminium production capacity will jump to 3.45 lakh tonne per annum to 4.6 lakh tonne.

Mr Pradhan did not forsee any problem in raising funds for the project. "We may even hit the capital market to raise funds for the project, if needed. However, we will try to provide for most of it through internal accruals," he added.