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NALCO to confirm a deal with coal supplier for Indonesian project

16 Jan 2012 Evaluate

National Aluminium Company (NALCO) is set to confirm a deal for supply of coal to its $3.8 billion aluminium-cum-power project in Indonesia. The state run firm will finalise deal with a coal supplier by next month. NALCO’s Indonesia project needs 5 MTPA of coal for 25 years. The company has selected one of the five proposals received for the same and will finalise the decision on it.

In respond to NALCO’s bid seeking sourcing of coal for its project, five coal miners - MEC Middle East, Pram Dwi Jaya Muara Enim and Bumi Muara Prasada, had responded of which two of them had fulfilled the criteria. The company has zeroed in on Muara Enim mine in the East Kalimantan district of Indonesia.

The aluminium major has plans to set up a 5-MTPA aluminium smelter and a 1,250-MW power plant in Indonesia entailing $3.8 billion (about Rs 18,000 crore) investment. The Indonesia project will be managed through a special purpose vehicle (SPV), in which the aluminium major will have a controlling stake. NALCO's investment would be 15 percent of the total project cost, while the JV partners would fund 15 percent and the remaining 70 percent would come through loans.

NALCO has got Rs 4,500 crore cash balance and there is no debt liability. The company has investment plans lined up for next three-four years and for 2012-13 its investment requirement is to the tune of Rs 2,200 crore.

Further to feed the aluminium smelter, the company intends to import about one million tonne of alumina annually from its facilities in India while the thermal grade coal for captive power plant will be procured locally. The company had invited Expression of Interest from competent miners or concession holders having resources in close proximity to seaport, fresh water source and other infrastructure facilities, for coal supply.

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