The Centre is likely to allow National Aluminium Company Ltd (Nalco) to pick up minority strategic stakes in overseas aluminium projects, particularly in the Middle East.
The gameplan is that a strategic investment, coupled with a long-term supply contract, will enable Nalco to tie up the 1.2 million tonne (MT) surplus alumina that the company will have after its Rs 5,100- crore expansion project.
Plans for a strategic overseas investment will, of course, run simultaneously with Nalco’s move to have an offshore greenfield project through a joint venture.
The ministry reckons that a strategic investment, together with a long-term supply contract, would add value to low-cost alumina production.
Nalco has been scouting for a partner to set up greenfield projects in Vietnam or Oman, but is yet to make any headway.
The Union ministry of mines, Nalco’s administrative supervisor, has reportedly given its nod for an overseas stake purchase, but a formal government clearance will be taken only after the ministry’s note on the issue is considered by the Cabinet Committee for Economic Affairs (CCEA).
Senior mines ministry officials said that the model suggested for Nalco would be Sohar Aluminium, which is setting up a 6.5-lakh-tonne aluminium project in Oman and start production in 2008.
Alcan, Canada, has a 20% equity stake in Sohar Aluminium, and the latter’s smelters will be fed with alumina supplied by Alcan. A similar arrangement for Nalco would insulate the latter from the vagaries it would have to face in selling surplus alumina, either on spot or annual contract basis.
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