Indonesian Industry Ministry says Nalco $3.2b smelter project making good progress

As India’s National Aluminum Co develops smelter and power projects in Indonesia, Iran, and South Africa, Indonesia’s Industry Ministry said the country’s second aluminum smelter could be on line by the end of 2010. Indonesia's Industry Ministry Metals Industry Director says India's National Aluminum Company (Nalco) is making good progress on its plans to build a $3.2 billion aluminum smelter and power plant in South Sumatra. In its first phase, state-run Nalco plans to build the smelter with an annual production capacity of 250,000 tonnes and the coal-fired power plant with a capacity to generate 750 megawatts of electricity. During the second stage, smelter capacity will be doubled to 500,000 tonnes and another 500 MW will be added to the power plant. The project will require 1 million tonnes of alumina annually from Nalco mines in India once it is completed. Indonesia Metal Industries Director Gusti Putu Suyawirawan told the Jakarta Post that Nalco needed one year to finish its studies, including a feasibility study and an engineering study. "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," Putu said. Indonesian Aluminum Association Chairman Abu Bakar said domestic demand for aluminum is high, thanks partly to growth in the real estate industry. Aluminum ingots have primarily been supplied by Indonesia's only aluminum smelter, state-owned PT Indonesia Asahan Aluminum (Inalum). Inalum operates in Kuala Tanjung Asahan, North Sumatra. Putu told the Post that Nalco and South Sumatra public administrators were discussing two possible locations for the Nalco smelter including Tanjung Api-api, in order to utilize the Tanjung Api-api port. Nalco India says that consultants have favored the Tanjung Api-api site in their preliminary site survey and studies. The other option is in Muara Enim which has an abundant coal supply. Aluminum Association's Abu said a smelter requires one ton of coal to produce around 140,000 kilowatt hours. He estimated that Nalco's coal consumption could reach more than 500,000 tons of coal monthly. Nalco's finance director BL Bagra told reporters in January that the South Sumatra government has allowed Nalco to explore the possibility of mining coal in the province. But if there is no available coal, the provincial government will arrange for supplies from the Tanjung Enim coal mine operated by state coal company PT Tambang Batubara Bukit Asam. Bagra said a long-term contract would be arranged with Bukit Asam because the smelter project life is 30 years. Russia's United Company RISAL and state miner PT Aneka Tambang Tbk signed a $1.4 billion deal last September to construct a bauxite and alumina complex on the island of Borneo. Putu told the Post that an Icelandic company has also expressed interest in building a smelter in West Kalimantan and using geothermal power. Nalco is also investing in smelter and power projects in Iran and South Africa as well as brownfield and greenfield growth projects in India. -mineweb