State-run NALCO, which plans to set up a 1,250-MW power project and an aluminium smelter in Indonesia, will complete due diligence on a proposal for sourcing coal for the projects by the end of this month, a senior company official said.
"We are in the process of evaluating the reserves of two coal mines and due diligence will be over by September. Then we will move further," said NALCO Chairman and Managing Director B L Bagra.
He added that the company has sought 10 million tonnes per annum (MTPA) of coal supply over a 20-year period and is looking at two coal mines in the East Kalimantan district of Indonesia.
"We are looking at (supplies from) two mines, having a minimum of 500 million tonnes of reserves, for sourcing 10 MTPA of coal. The mines are in East Kalimantan district," Bagra said.
The Navratna firm has plans to set up a 5 million tonnes per annum aluminium smelter and a 1,250-MW power plant in two phases (700 MW in Phase-I and 550 MW in phase-II) in Indonesia at an estimated investment of USD 3.8 billion (about Rs 16,500 crore).
Out of the 10 million tonnes per annum of coal solicited by the company, the aluminium producer will utilise about 8 MTPA at its power plant and smelter in Indonesia, while the remaining 2 MTPA will be shipped to India to fuel its operations here, Bagra said.
"The site of the plant will depend upon the due diligence (exercise)... but it will be in East Kalimantan district only, where the mines are located," the NALCO Chairman said, adding that the decision would also be taken on the basis of a feasibility study and detailed project report (DPR).
He further said the Indonesia project will be managed through a special purpose vehicle (SPV), in which the aluminium major will have a controlling stake.
The project would be developed in about 4 years time, including one year for preparing the feasibility study and DPR, following finalisation of the coal supply agreement, Bagra said, adding that the Indonesian SPV formed by NALCO would raise the necessary finances.
"We will take about one year to prepare the feasibility study and DPR for the power plant and smelter and another 3 years to develop it.
"For the project, the special purpose vehicle (SPV) will raise loans, but nothing has been decided as of now. Ideally, we would like have a debt-equity ratio of 70:30," he said, adding that a final decision on financing the project will depend on the feasibility study and DPR.
Shares of the company were trading at Rs 66.25 apiece on the Bombay Stock Exchange at 1405 hours today, up 0.15 per cent from their previous close.
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