Nalco on expansion mode, to mine other minerals too

Even as Nalco undertakes its Rs 41,500 crore greenfield projects, the country’s second largest aluminium producer now wants to diversify and mine other minerals in India or abroad. Nalco is on an expansion and diversification spree like at no other time in its history. According to sources, Nalco has already made a pitch at the ministry of mines, where it stated that mining for other minerals (currently it mines for bauxite) within the country or abroad is a possibility. This comes close on the heels of another state-run navratna NMDC entering into a joint venture with mining giant Rio Tinto to explore global and domestic mineral reserves. Sources said the Nalco proposal is still at a very preliminary stage and it is not clear if they want to enter into a joint venture with a private party or carry on the mining activity alone. “In a fast-changing market, you must innovate and diversify to keep up, but on the other hand there are risks of diversifying too much,” said a mines ministry official. “The caveat is Nalco should not try to expand too quickly as they may spread themselves too thin. Basics of planning, execution and strategic logic should always be present,” the official added. Nalco also proposes to set up an office in Palembang, Indonesia, to pursue issues like coal exploration, land acquisition and investment approval. Nalco is proposing to set up a 0.5 mt smelter project along with a 1,250 mw coal fired captive power plant in Indonesia with an investment of $3.5 billion. Production from this plant is expected to start from 2013 and the feasibility report of the project is expected to be submitted by November. The company is also setting up a 3.1 lakh tonne smelter project in Iran in two phases at a capital cost of $1 billion as a joint venture with Alpha (in which Kerman Development Organisation is the major partner). The project is expected to go on-stream by 2012 and the feasibility report for the project is expected to be submitted by December. At home the company is also toying with the idea of expanding its smelter capacity in Angul with the construction of a fifth potline. This would entail an investment of Rs 2,000 crore for the smelter and another Rs 1,000 crore for a 310 mw power plant. Coal supply is the greatest headache for the company as the fifth line would mean additional linkage of 17 lakh mt since its Utkal-E reserve will be inadequate to meet demand than the two units already envisaged. The company is currently implementing its second phase expansion at an investment of Rs 4,092 crore, which is scheduled to be completed by 2008 end. Plans are also afoot for third phase expansion, which is likely to entail expenditure to the tune of Rs 6,000 crore. Under this expansion, the bauxite mining capacity shall be enhanced to around 90 lakh tonnes, alumina refining to 30 lakh tonne, aluminium smelting to 6.3 lakh tonne and power generation to 1,700 mw per annum. Source: Express India