Nalco Rs 20,000 crore overseas projects delayed due to policy hurdles

August 13, 2009: National Aluminium Company Ltd's (NALCO) greenfield projects in overseas markets like Indonesia and Iran are in limbo because of political and policy hurdles in those countries.

The policies of the Indonesian government and a volatile political situation in Iran are keeping the aluminium major from setting up its plants entailing an estimated investment of over Rs 20,000 crore, NALCO CMD C R Pradhan said during his recent visit to Kolkata.

Though, the Indonesian law does not allow foreign companies to have a stake in mineral exploration, the NALCO project would be developed in a joint venture with a local partner who will have the control of the rights of coal and bauxite mines, he said.

The company would go ahead with the project, which would require at least Rs 10,000 crore investment each, only after there is assurance of the right of some control on the minerals, Pradhan said.

The navratna company would be the majority shareholder and will control the management of the projects, Pradhan said.

Last year, NALCO had inked an agreement with the government of Indonesia for setting up a 5-lakh-ton aluminium smelter and a 1,250 MW captive power unit at an investment of about Rs 17,000 crore.

In Iran, NALCO has plans to set up a 3.30-lakh-ton smelter in a joint venture with the Iranian firm ALPHA at an investment of Rs 10,000 crore. But, the company seeks a better political climate before it submits the project plan to the Iranian government for approval.

It also plans to set up an aluminium smelter in South Africa, but the project is in nascent stage.

NALCO was aiming to ramp up its production capacity to 2.10 lakh tons per annum for the current fiscal. In 2010-11, the capacity would be scaled up to 2.60 lakh tons.

Pradhan was also expecting aluminium prices to stabilise at Rs 1,800-2,000 a ton which, he said, would offer the company a comfortable margin as its break-even price was below Rs 1,400 a ton.

Source: Business Standard