16_India Update_AIT_0509.
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16 INDIA UPDATE – By Dilip Kumar Jha*
Nalco on a tightrope
State-owned aluminium group National Aluminium Company (Nalco) is facing yet another problem with
its proposed second smelter as the government has asked the company to move the location.
Nalco proposes to set up of a 500kt/y
aluminium smelter along with a
1260MW captive power plant (CPP)
costing INR163.45bn ($3.27bn). The
ideal location for the proposed project
is Jharsuguda as it is in the vicinity of
the IB valley coalfields. Learning from
past problems it has faced for coal
procurement, the company decided to
set up the project close to the coalfield
to avoid any cost overrun and the
higher procurement costs of coal.
This apart – given the backdrop of
problems in land acquisition for
industrial units in Orissa – the land
required for the project was expected
to be trouble-free as most of the
identified area was government-
owned barren land.
However, the board of government
owned Nalco has been asked by the
state government to consider moving
the location to Gopalpur. The
company fears moving the project
there will mean shifting further from
the coal mines, which will push up the
cost of transportation. Judging by the
present railway infrastructure in the
state, it would be more convenient to
carry alumina from the company’s
refinery at Damanjodi in Koraput
district for conversion into aluminium
at Jharsuguda rather than carrying it
from Damanjodi to Gopalpur.
Sources said Jharsuguda is saturated
with a planned number of large
industries, particularly in the sectors
of power, aluminium and steel. In
fact, the State Pollution Control
*India correspondent Board has recently initiated steps to
Virat Nagar conduct a study on the industries in
the Sambalpur-Jharsuguda belt.
Table 1: Nalco’s
annual product Environmental study
figures (in tonnes) Nalco invited technical offers from five
2008 2007
Aluminium primary 360 457 358 734
Calcined alumina 1 559 200 1 463 300 1 578 000
Rolled products 10 004 2587
Alumina-special grade 12 448 – 7186
Alumina hydrate 1 575 500 1 475 200 1 590 000
Zeolites 4506 6952
Bauxite 4 684 684 4 623 278 4 854 253
Al wire rods 0 0
Al billet 0 0
Al strip 0 0
May/June 2009
Indian institutes of technology (IITs) –
namely Kanpur, Kharagpur, Mumbai,
Delhi and Chennai, the Nagpur-based
National Environment Engineering
Research Institute (NEERI) and New
Delhi-based Tata Energy Research
Institute (TERI) to conduct an
environmental impact study.
The study is expected to consider the
existing level of emissions, the level of
water and air pollution at present and
quantify future levels of pollution,
among other things. It will recommend
the maximum number of industries
which can be built in the area. But the
study is likely to take more than a year.
Under these circumstances, if the
government insists on changing the
location of the project to Gopalpur, the
company will be forced to shelve its
plan for a second aluminium and
power complex.
Increased capacity
Undeterred by the present slump in the
international aluminium market, the
company is planning to add 115kt
capacity to its existing smelter at
Angul. This represents a 33.3%
increase.
With the INR40.91bn ($818M)
second phase expansion nearing
completion, the aluminium capacity is
expected to grow from 345kt to 460kt.
Half of this new capacity, about 55kt,
was set to go on stream with the
commissioning of 120 new smelting
pots at the Angul plant.
The expansion plan envisaged adding
240 pots to the production line, which
the company expects to achieve shortly.
To feed power, which accounts for
nearly 50% of the input cost in
aluminium making, to the new
smelting capacity the company plans to
2006 2005 2004
358 954 146 322 235 979
1 566 720 1 550 100
5040 858 2660
413 – construction, aluminium foil is widely
1 575 500 1745
7740 4046 928
4 851 726 4 816 762
0 49 228 40 939
0 14 466 11 872
0 3846 3493
www.aluminiumtoday.com
commission a 9th unit of its (CPP),
with an installed capacity of 120MW, in
April. Its CPP, at present, has eight
units of 120MW each.
The second phase expansion
envisaged ramping up the alumina
capacity of the refinery at Damanjodi
from 1.57Mt to 2.1Mt, which is
expected to be achieved by June and a
corresponding increase in the bauxite
mining capabilities. But a recent attack
by local terror group, the Naxal, on the
plant may push the capacity expansion
back. Commentators have questioned
the prudence of going ahead with
capacity expansion when many
aluminium producers are mulling over
production cuts or idling their units.
But the expansion plan was conceived
in 2004 and is progressing as per
schedule.
Meanwhile, production at the
4.8Mt/y Panchapatmali bauxite mines
suffered for two-days because of
another Naxal attack on the plant.
Although the mining activity quickly
resumed, the incident left scars on
employees who were held captive for
eight hours. The bauxite mined from
this plant is refined in Nalco’s alumina
refinery at Damanjodi which is located
about 15kms away from the mine.
Seeking safeguards
The company is in discussion with the
Commerce Ministry to have at least a
10% safeguard duty on imports of
primary aluminium, which will make
the local product cheaper. Recently, the
government levied a 35% import duty
on value added aluminium which
protects the interest of the AV Birla
Group (Hindalco) and Anil Agarwal’s
Vedanta Group. However, the interest
of Nalco was not protected as it
produces primary aluminium. India
levied a safeguard duty of 22% on
aluminium foil and 35% on aluminium
sheets for 200 days against China.
While aluminium sheet is primarily
used by sectors such as automotive and
consumed by the packaging industry.
Hindalco and Vedanta are the main
producers of these two markets.
Nalco’s recognition as the world’s
lowest cost alumina producer is at stake
because of squeezing margins between
rising cost of coal procurement and
falling global aluminium price.
Aluminium International Today
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