Tapping Nature

BAUXITE IS TRANSPORTED through the 14.6-km conveyor belt from Nalco's mines to its alumina refinery in Orissa.-THE HINDU PHOTO LIBRARY

Nalco, now a Navratna company and a five-star export house, has Asias largest integrated alumina-aluminium complex.

THE story of the Orissa-based National Aluminium Company Limited (Nalco) is rooted in the bounty of benign Mother Earth and the indomitable spirit of man. Years of largely unnoticed, and unsung, prospecting in the hostile wilderness of the Eastern Ghats led to the momentous discovery of over 1,000 million tonnes of bauxite reserves in 1975. The country now ranks fifth in the worlds bauxite resources graph, with total estimated reserves of 2,900 million tonnes.

The Central government authorised Aluminium Pechiney of France on March 28, 1978, to prepare a feasibility report on the industrial use of bauxite for the establishment of an integrated aluminium complex. Feasibility studies focussed on Panchpatmalli, five flat-topped hills, 30 km east of Koraput in Orissa and 130 km north of Visakhapatnam port, containing the single largest deposit of 370 million tonnes of bauxite.

In May 1980, Bharat Aluminium Company Limited, the forerunner in the public sector aluminium industry, presented the Orissa aluminium complex proposal to the Government of India. On November 1 that year, the government took a colossal investment decision. Nalco got incorporated in 1981 as a public sector enterprise under the Union Ministry of Mines. It now boasts Asias largest integrated alumina-aluminium complex, its activities comprising bauxite mining, alumina refining, aluminium smelting and casting and power generation.

With its technical collaboration with Aluminium Pechiney, ISO 9001:2000 certification of quality management, registration of products at the London Metal Exchange, environment care conforming to ISO 14001, low-cost operations and an international customer base, Nalco now enjoys the status of a five-star export house and a Navratna company. Nalco has played a significant role not only in achieving self-sufficiency in alumina and aluminium production for India but also in exporting these items to more than 30 countries worldwide.

The audit results for the year 2006-07 reported a turnover of Rs.6,515 crore for the company, including export earnings of Rs.2,585 crore and a net profit of Rs.2,381 crore (see Table 1).

Nalco became a zero-debt company at the end of 2004-05 fiscal. At the beginning of the year, the company had loans amounting to Rs.654.39 crore. However, with prudent financial management coupled with increased production and realisation, it was able to repay the entire amount.

Indeed, Nalco had achieved zero-debt status in September 1998, too, when the company successfully discharged a foreign currency loan of 20 billion Japanese yen plus interest, which in Indian currency worked out to Rs.627.64 crore and Rs.11.86 crore, respectively. The company had borrowed a total of $980 million from a consortium of international banks to finance its initial project costs. Apart from the part funding of the capital cost of the original project to the tune of Rs.1,288.62 crore by way of equity, Nalco has never depended on budgetary support from the government.

The company completed its first phase of expansion with an investment of Rs.3,600 crore. Now, the second phase of expansion is under implementation with an investment of Rs.4,092 crore: it is scheduled to be completed by the end of 2008 (see Table 2). At the same time, plans are afoot for a third phase of expansion on a much higher scale.

As for new projects in the country, a mines and refinery complex is being planned in Andhra Pradesh. The bauxite mines will have a capacity of 42 lakh tonnes, while the refinery will have a capacity of 14 lakh tonnes. The project will involve an investment of Rs.7,000 crore. In Orissa, a smelter and power complex has been planned in the Ib valley in Jharsuguda district at an investment of Rs.8,500 crore. This project envisages a smelter of five-lakh-tonne capacity and a coal-based power plant of 1,260 MW capacity. Meanwhile, Bharat Earth Movers Limited (BEML) and Nalco have entered into an agreement to collaborate on the production of aluminium rail wagons. Aluminium rail coaches and metro coaches will be taken up subsequently. The two PSUs will jointly develop the products and Nalco will supply the aluminium extrusions after conversion from its billets and ingots through a third party. Aluminium wagons and coaches have advantages such as lower weight, a higher carrying capacity, environment friendliness and lower life cycle costs, compared with wagons now in use.

In the beginning of this year, Nalco also signed a memorandum of understanding with the Government of Indonesia to set up a five-lakh-tonne-capacity smelter and a 1,250 MW capacity captive power plant in that country. Nalco plans to invest around $3.4 billion in this greenfield project, which works out to around to Rs.14,000 crore. The proposed plants will be set up in two phases. In the first phase, the company will have a 2.5-lakh tonne capacity smelter and a 750 MW power plant.

Nalco is also exploring the possibilities of setting up plants in South Africa and Iran. Closer home, Nalco is trying to set up an aluminium park for upstream and downstream industries, in Angul, as a joint venture with the Orissa Industrial Infrastructure Development Corporation (IDCO). About 500 acres (200 hectares) of land are being acquired for the project. Nalco and IDCO will take care of basics such as infrastructure, communication and power supply. The proposed upstream industries will explore the prospects of castings, extrusions, aluminium conductors and aluminium plates and rounds, besides other products.

In the downstream segment, a special-grade alumina plant, a detergent-grade zeolite plant and a rolled products unit have been commissioned by Nalco. The capacity expansion and these downstream projects will add volume and value to the companys operations. Apart from exporting alumina and aluminium worldwide, the company has opened stockyards in various parts of the country to facilitate domestic marketing. With its consistent track record in capacity utilisation, technology absorption, quality assurance, exports performance and posting of profits, Nalco is a bright example of Indias industrial capability.

Nalco has 7,000-plus skilled employees who are comparatively young and whose knowledge and skill base are among the best in the country. The compensation and rewards systems, as well as the employees welfare and social security schemes provided by the company, are among the best in the public sector. The company has set up composite townships at Angul and Damanjodi, with hospitals, schools, community centres, clubs, parks and market complexes, for its employees and people living in the vicinity. Also, there is a compact colony for corporate employees in Bhubaneswar.

Nalcos R&D (research and development) centres at Damanjodi and Angul are recognised by the Department for Scientific and Industrial Research, Ministry of Science and Technology. The in-house R&D efforts in the directions of process improvement, energy conservation, promotion of indigenous technologies, commercial utilisation of industrial waste and development of value-added products have paid handsome dividends.

Nalcos collaboration with premier research laboratories has resulted in several research initiatives in alumina and aluminium. The development of indigenous technology for the production of detergent-grade zeolite has led to the establishment of a 10,000 tpa Zeolite-A plant by the company. Nalco has set up, on the basis of collaborative research, facilities for making 26,000 tpa special-grade aluminas and hydrates. The company has obtained patents for certain special types of aluminas and hydrates.

Nalco assigns high importance to the promotion and maintenance of a pollution-free environment in all its activities. Its environment management systems in all production units conform to the ISO:14001 norms. Two highest national awards Indira Priyadarshini Vrikshamitra Puraskar for afforestation and Indira Gandhi Paryavaran Puraskar for environment management conferred on the company by the Union Ministry of Environment and Forests bear testimony to its commitment to the environment.

Nalco has come to represent an improvement in the quality of life for communities residing in the vicinity of its plants. The company has comprehensively addressed the problems of rehabilitation of displaced families with adequate compensation, housing and employment.

In the 27 years of its existence, Nalco has created national assets worth over Rs.14,000 crore (see Table 3). It continues to yield rich dividends for the nation. Its shares are listed in the Bombay Stock Exchange and the National Stock Exchange.