Nalco Eyeing Iran as Potential Home for New Smelter

Nalco Eyeing Iran as Potential Home for New Smelter
Huge Factory on Western Outskirts - Tehran - Iran Source: Creative Commons

India’s state-owned aluminium producer National Aluminium Company Limited (Nalco) is looking abroad for a location to build its planned 500,000 metric-ton-per-annum aluminium smelter. According to the company’s top executive, the Islamic Republic of Iran is at the top of the list.

“Three things push up the production cost of aluminium in India – energy, labor and freight. We want to take these three advantages in the international markets. So, we are searching for a place where we can manage costs, and in West Asia these benefits are available. We are now weighing among Iran, Oman and Qatar, with Iran being a frontrunner,” explained Tapan Kumar Chand, chairman and managing director of Nalco.

The amount of Nalco’s investment will depend upon the power arrangement that is made for the plant, he went on to explain.

“If we can get direct power, with long-term agreement, then we will only go for the smelter unit. If we go only for the smelter unit, the cost can be around Rs 12,000-13,000 crore (US$1.8 billion to US$1.9 billion). But if we have to go for a power plant, the cost will be more,” Chand said.

“We are planning to send a team in May,” he said. He went on to say that the final decision may be made in the next two to three months.

Nalco already plans to expand its domestic refining capacity by adding one million metric tons per annum to its Damanjodi unit. The company expects such an expansion to cost US$3 billion.

“This brownfield expansion has become possible because of the coal block allocation (Utkal coal blocks). The state government has given the Pottangi mines (bauxite) and they expect some value addition in Odisha. Now on the raw material front, Nalco is secure,” said Chand.

Chand said that Nalco is entering a growth phase, expecting to increase bauxite and alumina by ten percent this fiscal year, and an increase in primary aluminium production of between ten and fifteen percent.

“Next year (2016-17), we are aiming for a 12 per cent growth in bauxite and hydrate,” Chand said.