Nalco may commence smelting aluminum by 2010 in $3b project

India's state-run National Aluminum Company (Nalco) is progressing well with plans to build a massive US$3 billion aluminum smelter in South Sumatra, targeting to start operation by 2010, an official says. Industry Ministry metal industries director I Gusti Putu Suryawirawan said Nalco had performed a number of studies for the project since April, including a feasibility study and an engineering study. "Nalco said it needed one year to finish its studies," he said on the weekend. " With estimations of six months and one year for equipment deliveries and construction respectively, Nalco's smelter is expected to start operation by the end of 2010." In its peak, Putu said, the smelter could produce up to 500,000 tons of aluminum ingots per year. In its first phase, he said, Nalco would need more than 1 million tons of alumina per annum as raw material which it would import directly from India. "In the long-term, Nalco is planning to work with (state-controlled mining firm) PT Aneka Tambang on an alumina refining plant, to supply raw material for Nalco's future smelter," he said. Domestic demand for aluminum products is high, thanks in part to encouraging growth in the Indonesian property industry, said Indonesian Aluminum Association chairman Abu Bakar. Aluminum ingots have long been supplied to the national market by state-owned PT Indonesia Asahan Aluminum (Inalum), the country's only aluminum smelter, which imports 600,000 tons of alumina every year. Inalum operates in Kuala Tanjung Asahan, North Sumatra, with an annual yield of 250,000 tons of aluminum ingots. Putu said Nalco and South Sumatra administration were discussing options for the location of the smelter. "There are two alternatives: One is in Tanjung Api-api, so the smelter could be near Tanjung Api-api port (in Banyuasin regency)," he said. "The other option is in Muara Enim where a there is an abundant supply of coal." A location near a coal mine would come in handy as Nalco also planned to set up five coal-fired power plants generating 250 megawatts each, Putu said. Abu said the Indian government was still negotiating with the Indonesian government to secure a coal supply concession for Nalco's future power plants. "A smelter consumes lots of energy, requiring one ton of coal to produce around 140,000 kilowatt hours. It is estimated Nalco's coal consumption could reach more than 500,000 tons of coal monthly." Besides Nalco, Russian Russal (the world's leading aluminum producer) and an Iceland company have also expressed their interest in building aluminum smelters in Indonesia, Putu said. While unable to provide its name, Putu said the Iceland company planned to build a smelter in West Kalimantan and would use geothermal power plants for energy.