India's NALCO To Keep Aluminum Output Unchanged

NEW DELHI -(Dow Jones)- India's National Aluminium Co. (532234.BY) will keep its targeted aluminum production unchanged for the year ending March 2009 on steady domestic demand, a senior company official said Wednesday. Output won't be cut despite a drop in international prices, B.L. Bagra, a director of the company, told Dow Jones Newswires in an interview. State-run NALCO plans to produce 360,000 metric tons of aluminum and 1.57 million tons of alumina in the fiscal year to March 2009, almost the same as the previous fiscal year, said Bagra. "Until the prices drop very sharply from current levels, we will continue to have normal production," he said. Aluminum prices on the London Metal Exchange have more than halved from their peak of $3,380 in July to $1,440/ton. Globally, companies such as U.S. aluminum giant Alcoa Inc (AA), Netherlands- based Vimetco NV (VICO.LN), BHP Billiton and some Chinese companies have reduced output. "We are not losing any money," Bagra said, adding the company's profit margin has halved from mid-2008 levels. NALCO is one of the world's lowest-cost aluminum producers. The company expects global prices of the white metal to recover from mid-2009, but analysts say prices may remain low for a longer period unless producers cut their output. Local demand for aluminum has been growing at a steady 7%-8% annually. "There has been no fall in demand; it has been steady," Bagra said. The company, which faced a severe coal shortage last year, has been scouting for coal mines and also has plans to partially import to meet its requirement. To Offer Stake To Local Indonesian Cos NALCO, which is setting up a INR140 billion aluminum smelter project in Indonesia, plans to offer stakes to local firms. "We plan to offer a strategic stake to PT Antam," Bagra said, adding NALCO will hold a 50% stake in the venture. The project involves setting up a 500,000 ton-a-year smelter and a 1,250-megawatt captive power plant. Last month, it signed an agreement with Rak Minerals & Metals Investments, a unit of Dubai's Rak Investment Authority, for using their railway and port facilities. Rak Minerals will also pick up a 24% stake in the aluminum smelter project. The project will only start after a draft report on its viability is ready in six months to a year. Bagra said the company is in talks with three coal companies for buying a majority stake in one of them, which would help in sourcing coal for the project while alumina will be shipped from India. RAK Minerals, which owns a coal mine, has also offered coal for the project, an option NALCO may consider if it is unable to buy a stake in any of the three coal companies, Bagra added.