Nalco puts $2bn Iran project on hold

By Shubhankar Behera

Bhubaneswar: Aluminium major National Aluminium Company (Nalco) has decided to keep its proposed $2billion smelter unit in Iran in abeyance due to global downturn in aluminium market.

The State-owned company is expected to review its decision sometime early next year, a company official said.

“Looking at the volatility in global aluminium market, it will not be wise to invest in our proposed plant in Iran now. We will take a call on this early next year”, said Tapan Kumar Chand, CMD, Nalco, on the sidelines of a business conclave of a national daily.

Asked if the project is shelved, Chand replied in negative.

“It will also be assessed whether production of aluminium in that country will be cost-effective”, he stated.

In May, Nalco had signed a Memorandum of Understanding (MoU) with Iranian Mines & Mining Industries Development Renovation Organization (IMIDRO) to jointly explore the possibility of setting up an aluminium smelter in Iran. The smelter-cum-gas based power plant is slated to be part of a joint venture aluminium company to be set up by Nalco in that country. It will utilize supply of alumina from Nalco’s refinery in India.

However, industry experts observe that Nalco’s decision to hold back its project visibly stems from the Union Mines ministry’s direction to it. After Nalco signed the MoU, Mines minister Piyush Goyal had asked the company to do a rethink on its overseas smelter plans and, instead, focus more on value addition in the country. The ministry has asked Nalco to draw up a roadmap to expand aluminium production capacity to 2 mtpa, up from 0.46 mtpa now. Official sources said Nalco had set a target to reach its full rated capacity (of 0.46 mtpa) in the next financial year.

Besides during the Make in Odisha conclave held earlier this month in the state capital, Goyal had asked Nalco to reconsider regarding the investment.

Speaking on the sidelines of the mega event, Goyal said: “So far they (Nalco) are looking at setting up a plant in Iran. So I have asked the board to reconsider that.”

“I believe that we should make in India… Ideally it should be in Odisha where the material is mined,” he added.

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The State-owned major has, however, kept its options open to go for a toll-smelting arrangement with some Iranian companies. Under this proposal, Nalco will divert a portion of its surplus exportable alumina to the Iranian smelters for conversion to aluminium. Through toll-smelting, Nalco intends to convert its alumina, currently exported to the international market, to aluminium by paying a tolling fee to the concerned companies.

“We are in the process of analysing the price offers for gas supplies which some Iranian companies have sent to us. Soon we will finalise these”, Chand stated.