India’s state-owned National Aluminium Co (Nalco) will build a $4.5 billion aluminium smelter with 500,000 tpy capacity in Indonesia’s East Kalimantan province.
Nalco signed an agreement with the provincial government on Tuesday to set up the smelter and a 1,250MW power plant, which are expected to take four years to construct.
The project will be executed through a joint-venture company in which Nalco will hold 75% equity with the rest being owned by a local coal mining firm that will also supply the required 5- 6 million tpy of coal.
The joint-venture partner has not yet been chosen, a senior Nalco official in India told MB. One Indonesian company reported to be in the running is MEC Coal.
The primary reason for setting up the Indonesian plant is the “availability of good quality coal at an economic price”, Nalco chairman and md Bajrang Lal Bagra said at the company’s agm on September 30.
“Around 30% of the cost in aluminium production is that of power, and in this project a captive supply of coal will make it very cost efficient,” Bhavesh Chauhan, a senior analyst at Angel Broking in Mumbai told MB.
Nalco will be supplying the raw material for the new plant from its Indian operations. The company owns one aluminium smelter, an alumina refinery, a rolled products unit and a bauxite mine in the eastern state of Orissa.
The company produced 443,000 tonnes of aluminium in the financial year ending March 2011 making it India’s third-largest aluminium maker. Its total sales during that period were $1.4 billion.
Indian businesses have already invested $20 billion in Indonesia’s steel, power and coal industries, according to India’s minster for commerce and industry, Anand Sharma, who was present at the deal signing event in Jakarta.
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