In what has come as a major setback for the Gujarat government’s ₹15,000-crore aluminium park in Kutch, National Aluminium Company Limited (Nalco) has asked the state-run Gujarat Mineral Development Corporation Ltd (GMDC) to drop the proposed 0.5 million tonnes per annum (TPA) aluminium smelter plant.

Detailed project report GMDC, in its 54th annual report for 2016-17, released after the company’s annual general meeting on September 29, stated that based on a detailed project report for the alumina refinery and smelter plant in Kutch, GMDC and Nalco “mutually decided not to proceed with the project.” GMDC was likely to get 26 per cent equity partnership in the joint venture.

“Land required for the project has been allocated by State government and part possession has been taken. The process for obtaining possession of the remaining portion of land also is under progress. DPR for the 0.5 million TPA plant got prepared by Nalco and is not viable. Hence, they have requested GMDC to drop the project and the same is under the approval of the government of Gujarat,” the annual report said.

According to sources, about 100 out of the required 300 hectares of land was already acquired for the purpose. Nalco had also made an upfront payment of ₹151 crore for setting up the alumina refinery and smelter plant in the Kutch region.

“Accordingly, based on facts and circumstances on the transition date, the same was disclosed as non-current non-financial liability. However, subsequently, based on the detailed project report, both the companies mutually decided not to proceed with the project. The company (GMDC) has initiated the process for repayment of the amount to Nalco without interest, subject to approval of the government of Gujarat. Accordingly, the amount has been classified as a current financial liability,” GMDC said in the annual report.

Nalco’s concerns About six years ago in 2011, GMDC’s board of directors had considered Nalco as a potential partner to form a joint venture for the alumina project, which was targeted to produce five lakh tonnes of smelter and 10 lakh tonnes of refined alumina per annum.

Later, in 2013, Nalco raised concerns about the extensive power consumption in smelter for converting alumina into aluminium. Nalco had asked GMDC to arrange electricity at a rate of up to ₹2.2 per unit to make the smelter project viable. Aluminium smelting is a process of extracting aluminium from alumina, while alumina is extracted from the bauxite ore, mined by GMDC at its existing mines in Kutch. The extraction process of bauxite to alumina takes place at the alumina refinery.

Earlier, the State government had signed an MoU with Ashapura Minechem, a bauxite miner and exporter but did not execute it, and fresh expressions of interest were invited in 2010.

Before Nalco emerged as the sole qualified bidder, other companies like Hindalco, JSW Aluminium and Adani Group were among those in the fray for partnership with GMDC. The move was aimed at utilising the natural resource available in the State after the government restricted the export of plant-grade bauxite outside Gujarat from 2010.

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