Nalco increase estimate for Sumatra plant to USD 4 billion

Bloomberg reported that National Aluminium Co raised the projected cost of an aluminum smelter in Sumatra, Indonesia by 25% to USD 4 billion to pay for extra infrastructure including rail links. Mr BL Bagra director finance of NALCO said that the venture, the company’s first overseas may invest USD 2.5 billion to build a plant capable of processing 1 million metric tonne of alumina into 500,000 tonne of aluminum ingots. The remaining USD 1.5 billion will be for railways, a 1,250 MW coal fired power plant and a port. Mr Bagra said that Indian companies are stepping up investments in Indonesia, Southeast Asia’s largest economy, to boost profits and secure access to raw materials, such as coal. The project will be located in Sumatra because the coal supply for power plant is close and Indonesia is a major market. Mr Bagra said that the new venture, in which Ras Al Khaimah, United Arab Emirates based RAK Minerals has a 24% stake may sell equity to local partners including PT Aneka Tambang and regional governments or through an initial share sale, after production starts in 2013. He added that the alumina for the smelter would be shipped in from India. PT Tambang Batubara Bukit Asam will supply coal. Securing coal supplies is of utmost importance for Nalco. The company has faced severe problems in India because of erratic coal supplies. Nalco has cut production three times this year because of inadequate fuel supplies. It’s alumina production dropped by 20% in September for want of coal. (Source from Bloomberg)