Nalco may shelve SA project

National Aluminium Company (Nalco) is set to put its proposed Rs 16,000 crore project in South Africa on the backburner after it failed to get assured coal supplies. The country's second-biggest aluminium producer, however, has gone ahead and inked JV partners for coal supplies in Indonesia and Iran. NALCO not seeing a slowdown in demand Nalco was said to be working with the Tata group for its South Africa project. It had planned to set up a 5 lakh tonne smelter, a 1250 mw power plant there. Company sources said the decision to drop the plan has nothing to do with the global meltdown. There seems to be a major hitch on assured coal supplies, which is in the hands of certain private groups in South Africa. NALCO seeks bids for alumina And if coal supplies are not in place, a smelter and power plant is not feasible, they said. "We had surplus alumina for only two overseas projects. With Indonesia and Iran making good progress, we thought it prudent to drop the idea of South Africa," Newswire18 quoted a company official as saying. Why are the markets so volatile? Arun Kejriwal replies An analyst tracking the sector said on anonymity, "There could be problem of coal supplies and the company has been trying to ensure supplies since the last one year. In these times of recession, companies in the commodity business would prefer not to lock up funds indefinitely for a project, whose linkages are yet to be in place." More India business stories Nalco plans to invest Rs 40,000 crore in greenfield projects in India and abroad. "We are not backtracking from any of our projects because of the global meltdown." "With most of the projects being of long duration, the effects of a downturn may not be there when the projects take off. The recessionary trends are temporary, we feel. Currently, we are not active on South Africa", an official said. The company is tying up its logistics in Indonesia. It has earmarked a land in the south Sumatra province after exploring 2-3 sites for its project viability. While it has frozen its joint venture partner, other issues related to the project would be completed in another six months. "We will provide a detailed project report following this and if everything goes smoothly, the project could take off by early 2010", the official said. Nalco is now active in Iran. Plans are afoot to set up a gas-based 3.1 lakh tonne smelter along with a 750-mw power plant. The aluminum major is close to freezing its JV partner for coal supplies in the country. "Some loose ends are there and the plant is likely to come in a year's time", he said. More India business stories Back home, the company is awaiting the clearance for allotment of water for its proposed 5 lakh smelter in Jharsuguda in western Orissa, following which it will proceed on the land front. --www.sify.com