Nalco India signs MOU to build aluminum plants

The Jakarta Post, Jakarta

India-based National Aluminum Company (Nalco) plans to build aluminum smelting and coal-fired power plants in South Sumatra with an investment of US$3.4 billion, to strengthen its market distribution in Asia.

Nalco is now preparing a feasibility study on the establishment of the plants after signing a memorandum of understanding (MOU) Friday with the South Sumatra administration, said Ansari Bukhari, director general of Metal, Machinery Textile and Miscellaneous Industries at the Industry Ministry.

The MOU was signed at the ministry by Nalco finance director B.L. Bagra and South Sumatra vice governor H. Mahyuddin NS.

"We choose Indonesia because of the favorable government, availability of coal and strategic market distribution," said Bagra.

He said the aluminum smelter would produce 250,000 tons of aluminum ingot per year and the power plants would have a generation capacity of 750 megawatts.

The two plants would be constructed on an area of around 1,000 hectares in Musi Banyuasin region in South Sumatra.

The aluminum smelter would procure alumina as intermediate material from Nalco's plant in India, while the power plant would procure coal from PT Tambang Batu Bara Bukit Asam's mine in South Sumatra.

The 27-year-old Indian company operates a mine in India with an annual capacity of 4.8 million tons of bauxite (a raw material for alumina production), an aluminum refinery with a capacity of 1.575 million tons per year and an aluminum smelter with a capacity of 345,000 tons.

The company expanded those facilities to increase its capacity to 6.3 million tons of bauxite, 2.1 million tons of alumina and 460,000 tons of aluminum ingots.

Bagra said the production of the smelting plant would be prioritized for domestic sales in Indonesia and the remainder would be exported to Japan, China and Taiwan, his company's strongest markets in Asia.

Ansari said there was a shortage in aluminum supply in the country, which currently had 75 aluminum companies.

According to the data given by director for metal industry I Gusti Putu Suryawirawan, last year's national consumption for aluminum ingot was 425,000 tons while the production capacity was 312,000 tons, resulting in aluminum import of 290,000 tons.

Ansari said the province government's main challenges were to improve infrastructure like roads and railway tracks connecting Nalco's project and the coal mine and harbor to support the company's operation.

The company is controlled by the Indian government. (ind)