India's Nalco Expects Government Nod for $3.6 Billion Odisha Smelter and Power Plant

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--India's National Aluminum Company Limited (BSE:532234) (Nalco) (Bhubaneswar, Orissa) is preparing the way to set up a new 500,000-ton aluminum smelting facility and a 1,250-megawatt (MW) captive power plant in Odisha's Sundargarh district. The estimated investment required for the project is $3.6 billion.

Nalco Chairman B.L. Bagra said that an independent consultant had confirmed in March that there was no water supply problem in the district, and the company is now hopeful of getting the Odisha state government's approval for the project.

Nalco currently has an alumina refinery capacity of 2.1 million tons per year and an aluminum smelting capacity of 4.6 million tons. The company has been looking to set up another smelter for the past three years, but its plans were not approved by the state government because of a number of issues related to the lack of a sufficient, uninterrupted water supply for the project. To tackle the water problem, Nalco appointed Lahmeyer International (Bad Vilbel, Germany) to conduct a study in 2011 on water availability for the project. This followed a directive from the state government, as the proposed smelter would require 90,000 cubic meters per day of water.

Bagra said that as no land or water issues for the project remained, the company was hopeful of getting the government's approval in principle. The company would be alone in developing the new capacity, as it was sitting on a comfortable cash reserve, he said. The company has reserves of $1 billion, zero debt liability, and the ability to raise $4.8 billion in debt funding.

Nalco will apply for a captive coal block after receiving government approval for the project near the Ib Valley, which is a coal-bearing region. The company will bid if the company puts the block up for auction. Bagra added that Nalco could not remain dependant on supplies from Coal India but required a captive coal block.

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