Nalco readies ~25,000-crore investment for expansion
National Aluminium Company (Nalco), a central government-owned entity, is set to join the club of million-tonne producers in the segment by 2020. It has readied about ~25,000 crore of investment to expand its aluminium, alumina and power capacities.
In the country, Hindalco and Vedanta have metal capacities of over one million tonnes (mt) a year. Nalco’s smelter at Angul can now produce up to 0.46 mt annually. “A fifth pot line with capacity to produce 0.6 mt will be added to the existing four. The cost of the project is ~12,000 crore. Normally, such work would take 3.5-4 years to complete; we are trying to complete it within three years,” said a top official.
It has also initiated steps to augment its power generation and alumina production, to support the metal capacity expansion. An agreement has been signed with NTPC for a 1,400-Mw thermal power plant at Gajamara in Dhenkanal district, close to its Angul smelter, for ~14,000 crore (a 50:50 joint venture). Power is a key input for aluminium making.
It has also got approval of the Union environment ministry to increase the capacity of its alumina refinery at Damanjodi in Koraput district by one mt. The project would cost ~5,600 crore.
After feeding the new aluminium smelting capacity, the excess alumina would be exported, at an expected ~200 crore net profit. After the expansion of aluminium, alumina and power capacities, the company’s post-tax profit is estimated to go up by ~1,000 crore annually.
Bauxite mining and alumina refinery facilities, in forested areas having a strong presence of armed Left-wing groups posted sterling performance in 2016-17. Nalco’s mines in the Panchpatmali hills, target of a Naxalite attack a few years earlier, produced a record 6.825 mt of bauxite, equalling the rated capacity. And, the alumina refinery at Damanjodi operated at 100 per cent capacity for the first time since inception, producing 2.1 mt.
The company is in the process of opening a new bauxite deposit in the south block of Panchpatmali; it is awaiting allotment of the Patangi mines, reserved for it. “The allotment has been delayed due to bureaucratic hurdles. This mine is crucial for our alumina and aluminium capacity expansions,” said the official.
The share price, face value of ~5, has more than doubled in the past 18 months to ~73.80 at the close on Monday on the National Stock Exchange. The company recently announced a 56 per cent interim dividend for 2016-17, about 16 per cent higher than last year.