NALCO plans $3.4 bn Gulf smelter
The company is also raising its aluminium smelter capacity in Orissa to 460,000 tonnes from 345,000 tonnes currently.india Updated: Apr 05, 2006 16:41 IST
Delta pilots vote to authorize a strikeState-run National Aluminium Co Ltd (NALCO) plans to build a $3.4 billion, 500,000-tonne aluminium smelter in the Gulf, in partnership with an oil producer, its chairman said on Wednesday.
NALCO, India's second-largest aluminium producer, will hold 51 per cent in the venture that will also have a 1,500 megawatt power facility and a jetty, he said.
"We are going to submit a proposal to the government soon. The location will be either Qatar or Oman," CR Pradhan said.
"It may a take a year for the proposal to be cleared. At best the clearance could come in 5-6 months."
NALCO, which proposes to ship alumina from its Indian plants to the smelter, has been eyeing the Gulf because of cheaper availability of fuel and had appointed Engineers India Ltd to make a feasibility study.
"The Gulf region gives us a lot of advantage in terms of lower taxes, excellent infrastructure and lower fuel cost," Pradhan said.
Energy accounts for about 33 percent of the total cost in the production of aluminium, analysts said.
The plant will be built in two phases of 250,000 tonnes each, and the output will be mostly sold in the European market, Pradhan said.
It would be funded through a combination of debt and equity, he said.
Shares in NALCO rose as much as 4.8 percent to a near two-month high of Rs 310.40 in a firm Mumbai market. The stock has risen more than 41 percent in 2006, beating a 24 per cent gain for the benchmark BSE index.
The company has set a target to produce 348,000 tonnes of aluminium in the year to March 2007, down 3 per cent from 358,000 tonnes last year because of a scheduled shutdown for maintenance, Pradhan said.
Alumina output will drop marginally to 1.57 million tonnes from 1.59 million in 2005/06, he added.
"Production of primary metal would be down as we would be taking scheduled shutdowns this year to realign pots," he said.
The company last week signed a memorandum of understanding with the federal government to raise its turnover to Rs 50 billion ($1.1 billion) and profit before interest and tax of Rs 22 billion in 2006/07, Pradhan said.
"We are hopeful of making profit after tax of between 15-16 billion rupees this year," Pradhan said.
Analysts expect NALCO to benefit from record high aluminium prices in the global market.
The company is yet to set a date for announcing its full-year earnings for the past year that ended on March 31. It posted a net profit of Rs 9.57 billion in the first nine months to December on sales of rs 33.5 billion.
NALCO would spend Rs 6.2 billion this fiscal as part of its $1 billion investment to raise alumina production capacity to 2.1 million tonnes by 2008, from 1.57 million tonnes now, bauxite mining to 6.3 million tonnes from 4.8 million and power generation to 1,200 megawatt from 960 megawatt currently.
The company is also raising its aluminium smelter capacity in Orissa to 460,000 tonnes from 345,000 tonnes currently.
NALCO, which competes with bigger rival Hindalco Industries Ltd, is also talking to the local governments in Orissa and Andhra Pradesh to set up an alumina plant of at least 1.5 million tonnes, Pradhan said.