Expression of Interest (EOI) for Setting up Caustic Soda Plant

National Aluminum Company Ltd (NALCO) requires 120,000 tonnes of

Caustic Soda per annum, which is met presently by procuring from domestic
manufacturers and importing from China and some othe r countries. NALCO is
interested to set up stand alone Caustic Soda Plant of 120,000 TPA or with
derivative in the proposed SEZ at Gopalpur or in Damanjodi or at any other
port based place in Orissa/Andhra Pradesh. For this purpose NALCO invites
Expression of Interest (EOI) from the interested, established and reputed
business organization(s). NALCO is open to options of the project being
implemented either by Joint Venture (JV) with equity participation basis or by
wholly owned by the Firms.
PART-1
1.0

General Information

1.1

Company profile and location of the plant: NALCO was incorporated in 1981 following a major investment decision
by the Government of India to exploit a part of the Bauxite deposit
discovered in the East coast of India.
NALCO is operating a multi-location Bauxite Mines-Alumina -Aluminium
complex along with a Captive Power Plant, in the State of Orissa, India.
A major expansion programme (1st phase) was started in 1997/1998 and
the same has already been completed. Currently the organization is in
the midst of Phase-2 expansion.
The plant capacity and location of various units of the complex after
Phase-1 expansion and current expansion are as under:
Unit

Location

Current
Capacities
4.8 MTPY

Bauxite
Mines
Alumina
Refinery
Aluminium
Smelter
Captive
Power Plant

Panchpatmali,
Distt:Koraput,Orissa
Damanjodi,
1.575 MTPY
Distt:Koraput,Orissa
Angul,
0.345 MTPY
Distt,Angul,Orissa
Angul,
960 MW
Distt,. Angul, Orissa

Capacities after
expansion
6.3 MTPY
2.1 MTPY
0.460MTPY
1200 MW

The product mix of NALCO is as follows: 1 Alumina & Hydrate

Calcined Alumina
Alumina Hydrate
2 Zeolite-A
3 Special Products

Specialty Hydrate/Alumina
(Alumina Chemicals)

Aluminium Metal
Ingots
Sows
Billets
Wirerods
Alloy wire rods
Cast strips

5 Rolled Product
Aluminium Flat Rolled Products

1.2

Brief company Highlights: Financial

All figures in Rs Crores
Sl.No.
1

Particulars
Paid-up Share Capital

As at
March 2007
664

Net Worth

7906

Sales Turnover

6517

Net Profit after Tax (PAT)

2381

1Crore equals to 10 Millions.

General
The company is listed on National Stock Exchange of India . The
registered office is located at Nalco Bhawan, P/1, Nayapalli,
Bhubaneswar-751013, Orissa, India. It is certified for ISO 9001: 2000,
ISO 14001 and OHSAS 18001. It has won several awards for
Environmental performance including the most coveted, Indira Gandhi
Paryavaran Puraskar- 2000, Pollution Control Excellence Award-2000,
and CII, Orissa, Environment Safety & Health Management Award2005.The Company has also won CAPEXIL Highest Export Award
continuously since 1988,the EEPC Export award, FIEO Niryat Shree
Award and many other awards for excellence in export performance.
1.3

Background
NALCO have decided to establish a Caustic Soda plant for producing
caustic soda to be used for our Alumina Plant at Damanjodi. The project
had been envisaged based on availability of Brine(salt) from coastal
Orissa and Andhra Pradesh.
It is proposed to locate this project in the vicinity of Alumina Refinery at
Damanjodi,Orissa. NALCO wants to set up a grass root plant for
production of caustic soda as well as want to have a flexibility of
producing and marketing different chlorine derivatives.
NALCO appointed M/s Lurgi India Ltd for preparation of Deatailed
Feasibility Report (DFR) for a 150,000 TPA Caustic Soda Plant at
Damanjodi,which consists of the following reports:
Market Survey Report.
Site Selection Report
Technology Selection report
Capacity Selection report
Detailed Feasibility Report
In this report process configuration of proposed plant has been
established based on feed stock availability, market analysis, site
selection, desired product pattern and the requirement of utilities,
chemicals and catalysts worked out. The report covers the description of
the projects and infrastructure facilities. The capital cost of the project
has been estimated and presented along with the financial analysis in
the report. The demand and supply forecasts presented in the report are
based on the information provided by M/s Nandini Chemicals, marketing
consultant engaged by Lurgi India. Plot plan for the project has been
included in this report.

Asahi Kasai Chemicals Corporation, Japan one of the technology

suppliers of Caustic Soda plants, has provided processing schemes
and other basic process inputs. UHDE, Germany also provided some
basic process inputs. The report is based on these basic inputs provided
by Asahi Chemicals, UHDE and in-house information of Lurgi India.
The primary objective of this Detailed feasibility study was to examine
the technical and economic viability of a proposed new Caustic Soda
plant to be located in Damanjodi.The consultants have concluded that a
plant of 120,000 TPA is economically viable.
Now, NALCO would like to set up the plant on stand-alone basis or with
chlorine derivatives either at SEZ Gopalpur or at Damanjodi or at
Paradeep or any other port based place in Orissa/Andhra Pradesh.
Present requirement of Nalco is 120,000 TPA Caustic Soda. Anticipated
caustic soda requirement of NALCO in near future (after expansion)
shall be 150,000 TPA. This will produce higher quantity of chlorine or
HCL, which may not be consumed or may be difficult to handle.
However, if the caustic soda capacity limited to 120,000 TPA (as per
present requirement), then the consumption of entire chlorine production
in the eastern part of India as well as nearby consumers is viable.
Accordingly, capacity of 120,000 TPA Caustic Soda production is
selected. However a minimum capacity of 50,000 TPA or more can
also be considered for this project.
1.4

Supply-Demand Scenario/ Market

Based on the analysis, there is enough scope for setting up a 120,000
tons capacity plant for Caustic Soda considering usage of chlorine,
slated for commercial production start up in the year 2010-11.

1.5

Technology Option and Grades

The technology for the production of Caustic Soda based on Membrane
Process is offered by many Licensors in worldwide. Some of them are as
follows:

Asahi Kasei Chemicals Corporation (AKC)

Uhde

Chlorine Engineers Corporation Limited

Ineos Chlor Limited

PPG BIZEC

Tokuyama Soda

Krebskosmo MZB

De Nora

OxyTech

1.6

Project Description
The proposed facilities comprise the following:
Process Unit
Caustic Soda Plant of 120,000 TPY capacity:
Consisting of salt handling, brine purification and filtration unit,
electrolysis unit, chlorine and hydrogen handling facilities,
Hypo unit
Hcl unit
Stable Bleaching powder Unit

.
Utility Facilities
Power requirement will be met from grid.

The proposed utility facility consisting of:

o Plant and Instrument Air System
o Nitrogen System
o Steam System
o Water System
o Cooling Water System
o Cold Water System
o Waste Air Dechlorination System

Offsite Facilities
The proposed offsite facility consisting of:
Storage Facility for Salt and other chemicals,
Caustic Soda (48%), Sodium hypo chlorite
tank, Hydrochloric Acid (33%), Bleaching tank
Sulphuric Acid (70%), Sulphuric Acid (98%)
Fire Fighting System
Lying of piping from port to plant area.

1.7

Project Schedule
A project execution plan was developed based on Lurgi's experience
and Licensors information or similar type of plant & considering the local
conditions. The Project Execution Plan is based on a phased approach
to the project.
The project is scheduled for commissioned within 24 months from
the selection of licensor including commissioning of 2 months or
28 months from the date of Project Zero date.

1.8

Capital Cost
The estimated investment cost for the proposed Caustic Soda Plant
(120,000 TPA) at Damanjodi on stand alone basis is Rs. 500 Crores
(INR 5 billion) with a foreign exchange component of Rs.110 Crores
(INR1.1 billion) as of April, 2007 price level and does not include
any future escalation. The above total project cost inc ludes a provision
of Rs. 40 Crores (INR400million) towards financial cost and Rs.16
Crores (INR160 million) towards margin money.
The cost estimates assumed to have the accuracy of level of +/10%.

1.9

Economic Analysis
The internal rate of return (IRR) on investment has been worked out.
Considering the project will start production from 2010-11 and using the
caustic soda for NALCOs own plant.

Salt
: 1,000 Rs/ ton
Caustic Soda (lye) : 14,000 Rs/ton
HCL
: 3,250 Rs/ton
Chlorine
: 6,000 Rs/ton
Stable Bleaching Powder: 13,600 Rs/ton
Electricity
:3.50 Rs/Kwh(from Grid)

For 120,000 TPA Caustic Soda (stand alone) Plant

IRR on Equity before tax: 14.34 %(with

Dept: Equity ratio of 3:2)
IRR on Capital before tax: 13.14 %

Sensitivity Analysis
Sensitivity analysis (before tax) is carried out for increase and reduction of
10% in sales price, operating cost and project cost.
For 120,000 TPA Caustic Soda (stand alone) Plant
Variation

-10%
+10%

Project Cost

Product Price

Operating Cost

IRR on
Equity%

IRR on
Capital %

IRR
on IRR on IRR on
Equity %
Capital% Equity %

IRR on
Capital %

16.87
12.22

14.61
11.88

5.40
22.83

16.65
9.22

7.45
17.91

20.53
7.97

Caustic Soda plant with chlorine derivatives

The chlorine generated in the caustic soda plant can be utilized for
the production of 2 main derivatives, which are

Ethylene Dichloride (EDC) / Vinyl Chloro Methane

(VCM) / Polyvinyl Chloride (PVC)

Synthetic Rutile
Considering the project cost between the EDC / VCM / PVC plants
separately, the cost for the EDC plant is much lesser than for the VCM /
PVC plants. Presently the PVC manufacturers are purchasing EDC from
abroad. The EDC produced can be easily sold in the Indian market.
Though setting up a Synthetic rutile plant is as profitable but the project
cost for synthetic rutile is almost double that of the EDC plant. Hence
EDC plant as chlorine derivative is selected.
Regarding capacity Caustic soda plant with 150,000 TPA along with
Ethylene Di Chloride plant of 100,000 TPA is best suited, as all chlorine
can be used totally for production of EDC.
The preliminary feasibility report also carried out for caustic soda
plant with one of the derivative plant by using produced chlorine.

PART-2
2.0

For the above project if it comes at Damanjodi, NALCO may

consider the following, if required by the interested Firms.

2.1.1 Land required on sub -lease basis for setting up of the Caustic Soda
Plant, railway siding, laboratory, office, loading& storing facilities etc.
2.1.2

Power supply at market rate.

2.1.2 Water supply on chargeable basis for operating the unit.

3.0

QUALIFICATION CRITERIA

3.1

Firms intending to participate are expected to meet the pre-qualification

requirement stated hereunder:

3.1.1 The Firms should have Technical Capability and Capacity, to be

assessed based on experience of operating plant for Caustic Soda and
effective utilization of its derivative products.
3.1.2

The Firms should be financially sound, to be judged by their latest

audited accounts and annual reports. The net worth and financial
performance should be commensurate with the volume of operation
being proposed under this invitation.

3.1.3 The Net worth of Firms should be positive as per the last audited
Balance Sheet.
4.0

JOINT VENTURE
If required by the interested Firm, NALCO may consider equity
participation in the proposed project up to 40%.

5.0

PREPARATION/SUBMISSION OF EOI
EOI outline requirements: The interested Firms are invited to furnish a
proposal in a format as outlined below in order to achieve the objective
of maintaining uniform proposal structure from all the Firms:
CHAPTER-I

LETTER OF SUBMISSION OF THE PROPOSAL

CHAPTER-II

ORGANIZATION PROFILE

CHAPTER-III

EOI QUALIFICATION SUMMARY(Refer Para 3.0

above)

CHAPTER-IV

INFORMATION ABOUT ORGANIZATION.

In this section, the Firm is requested to furnish
details pertaining to company formation, legal
status, place of registration, principal place of
business of the company, number of years in
the relevant business, and volume of sales
along with market shares in the related
segment. Organization Structure along with
qualification & experience of key personnel, etc
may be provided.

CHAPTER-V

ANY OTHER INFORMATION IN CASE THE

FIRMS DESIRES TO FURNISH
In this section, the Firm may furnish details
about technical capability, capacity, market etc
in undertaking similar nature of works. Firm
may also submit any other information he
desires to furnish on his own to supplement his
capabilities.

CHAPTER-VI

OUTLINE OF THE PROPOSED PROJECT

In this section, Firm is expected to furnish a
brief on business plan, which should comprise
of the technology to be used, proposed product
range, marketing and utilization of derivative
products.

6.0

SUBMISSION OF EOI
Firms are expected to prepare EOI in accordance with requirement vide
Clause 3.0 and 4.0.The proposal along with all information and requisite
documents should be delivered at the following address latest by 31st
August, 2007.
N.Ravi
Senior Manager (BD)
National Aluminium Company Limited
Nalco Bhawan
P/1 ,Nayapalli
Bhubaneswar-751 013.
Place:Bhubaneswar
Date: 19.07.2007

N. Ravi
Sr.Manager (BD)
Telephone: 0674-2300789
Telefax:
0674-2300612
Mobile: +91-9437019892
E-mail: NRavi@nalcoindia.co.in