Nalco draws up ₹37,000-cr plan for expansion, diversification

ABHISHEK LAW Kolkata | Updated on January 20, 2018

Tapan Kumar Chand, Chairman & MD, Nalco

Long-term plan to cut production cost

State-owned aluminium major National Aluminium Co Ltd is planning to invest over ₹37,000 crore over the next 5-7 years for expansion of existing facilities, setting up of new smelter unit overseas, development of mines and diversification in power.

Reducing expenses

According to Tapan Kumar Chand, Chairman-cum-Managing Director, Nalco, the company is undertaking the investment plan to reduce operational expenses and to beat the depressed market realisations.

“Over ₹37,000 crore will be spent over the coming 5-7 years. Focus will be on reducing costs of producing aluminium by achieving higher economies of scale,” the CMD told BusinessLine.

Brownfield expansion and tie-ups with low power producers overseas is its two-prong strategy to wriggle out of “subdued market conditions.” The company expects 6-7 per cent overall cost benefit through this exercise.

Because of lower costs, currently around 56 per cent of the country’s aluminium requirement is met through imports.

Smelter in Iran

According to Chand, it is in advanced stages of discussions to explore the possibility of setting up smelter of 0.5 million tonne a year (mtpa) capacity in Iran. The proposed smelter will come up at an estimated cost of ₹12,000-13,000 crore.

In case a captive power plant is added to the project, then the cost will go up by another ₹6,000 crore.

A team of officials are expected to visit Iran in May. A decision will be taken based on examination of various factors such as availability of low cost power, labour and other infrastructure.

“We are also weighing options of setting up smelter projects in Oman and Qatar,” the CMD said.

Domestic plans

On the domestic turf, Nalco will look to set-up a new unit at Angul in Odisha. The 0.5 mtpa smelter unit will come up at an estimated ₹12,000 crore.

The allotment of Utkal D and E coal blocks and the Pottangi mines — the raw material for bauxite — is also expected to help the aluminium maker. Around ₹300 crore will be spent towards development of these mines.

Further expansion plans include setting up of a 1 mtpa alumina — the intermediary before manufacturing aluminium — refinery at Damanjodi in Odisha at an estimated cost of ₹6,000 crore.

The Navratna will also spend ₹300 crore towards development of a 2.4 lakh tonne a year caustic soda plant in Gujarat and another ₹500 crore towards development of wind power projects in India.

Published on March 20, 2016

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