Ambitious plans

Interview with C.R. Pradhan, CMD, Nalco.

C.R. PRADHAN, Chairman and Managing Director, Nalco, spoke of Nalcos expansion trajectory in an interview. Excerpts:

Navratna status was conferred on Nalco recently. In what ways will this benefit the company?

This prestigious status is conferred on select Central public sector enterprises that emerge as significant players in the countrys economic development and have the capacity to become global giants. With this elevated status, Nalco now enjoys more managerial powers and commercial autonomy to chart its own course in the world market.

Do you have any further brownfield expansion plans after you complete your present second-phase expansion? What about government support?

Except for 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 not depended on budgetary support at any point of time not even for the Rs.3,600-crore first-phase expansion. Now the second-phase expansion is under implementation at an investment of more than Rs.5,000 crore; it is scheduled to be completed by 2008 end.

Now, plans are afoot for a third-phase expansion, which is likely to entail an expenditure to the tune of Rs.6,000 crore. Under this expansion, the bauxite mining capacity shall be enhanced to around 90 lakh tonnes from 63 lakh tonnes; alumina refining to 30 lakh tonnes from 21 lakh tonnes; aluminium smelting to 6.3 lakh tonnes from 4.6 lakh tonnes; and power generation to 1700 MW from 1,200 MW a year.

What about your overseas projects?

Nalco has drawn ambitious growth plans involving massive investments, of around Rs.40,000 crore, in the next five years. These include smelter and power projects in Indonesia, South Africa and Iran. Primarily, we are looking at countries where we can have power at a cheaper price.

At the beginning of this year, Nalco signed an MoU with the Indonesian government to set up a five-lakh-tonne smelter and a 1,250 MW captive power plant in that country. Nalco plans to invest around Rs.14,000 crore in this greenfield project.

Besides, Nalco is exploring the possibilities of setting up a smelter and a power plant in South Africa at an investment of around Rs.16,000 crore. In Iran, a 3.1-lakh-tonne smelter has been planned in two phases as a joint venture with ALPHA, in which Kerman Development Organisation is the major partner. The project cost will be approximately Rs.8,000 crore.

These projects are being pursued simultaneously one or two of these will be ultimately taken up on the basis of viability.

What about greenfield projects within the country?

Well, 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. A draft MoU is being discussed with the Government of Andhra Pradesh. The project will involve an investment of Rs.7,000 crore.

In Orissa, a smelter and power complex has been planned in 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. A pre-feasibility report has been finalised by EIL. Nalco submitted to the Orissa government in June an application for the allotment of water resources, the most critical factor.

Any plans for upstream or downstream projects?

Yes, Nalco has plans to set up analuminium park in Angul, as a joint venture with the Orissa Industrial Infrastructure Development Corporation. Bharat Earth Movers Limited and Nalco have entered into an agreement to collaborate for the production of aluminium rail wagons.

As you know, aluminium wagons and coaches have advantages such as lightness of weight, a higher carrying capacity, environment friendliness and lower life cycle costs. With petroleum prices sky-rocketing, aluminium wagons are the ultimate answer, I believe