NALCO may partner GMDC for aluminum projects in Kutch

 

 

Mr VS Gadhvi MD of GMDC which is owned by the government of Gujarat said that “Two months earlier we had asked the four shortlisted companies for financial terms. Only Nalco has responded. More or less, the joint venture will be with Nalco for the project. Subject to detailed scrutiny.”

 

 

Mr Gadhvi said that the company would take a fortnight to evaluate Nalco’s financial terms and then put the matter before its board of directors. By December the board should be able to finalize and then the project will be sent to the government for its approval.

 

 

The project is for a million tonne alumina and 500,000 tonne aluminum smelter and GMDC will supply bauxite from its mines in Kutch. The total project cost is expected to be around INR 15,000 crore.

 

 

The nine companies that had shown interest through Expression of Interest letters were Hindalco Industries, Gujarat Foils, JSW Aluminum, Nalco, Aluchem (USA), Dubai Aluminum, Jaiprakash Associates, Adani Group and Jindal Steel and Power. Gujarat Foils had partnered with Rusal of Russia, the world's largest aluminium maker, to bid.

 

 

An official from one of the bidding companies said the bauxite quality at GMDC's mines in Kutch was not very good. The bauxite is of low quality and that will increase the cost of production of alumina and aluminum.

 

 

An official from another major aluminum maker said that "The project was not feasible for us. While we would have made all the investments, GMDC would own a significant minority stake because it was supplying the raw material."

 

 

Vedanta Aluminum did not even put in its EoI on the grounds the bauxite deposits in the state are very less and an investment of that size would be unfeasible in the long run. GMDC's mines to support the plant have bauxite reserves of 25 to 30 years.

 

 

The project has been mired with delays from the beginning. Ashapura Minechem, a bauxite miner and exporter was supposed to set up the plant earlier with GMDC. However, the company could not execute the project and the MoU expired and GMDC invited fresh EoIs.

 

 

Even shortlisting of the project was delayed by close to a year. GMDC had announced the project last calendar year and was supposed to shortlist companies by January 2011. However, consistent delays in evaluation, coupled with other administrative issues, forced the company to go slow on the process.