Mahanadi Coalfields seeks government approval for INR 34,072 crore investments in Greenfield aluminium project

Mahanadi Coalfields Limited (MCL), a subsidiary of Coal India Limited (CIL), awaits government approval to invest INR 34,072 crore in an integrated Greenfield aluminium project in Odisha. The project will have a 2 million tonnes alumina refinery, a 0.5 million tonne aluminium smelter, and a 1,400 megawatts captive power plant.

For the integrated project, Mahanadi will acquire a bauxite block at Sijimali or Kutrumali in Odisha, mine six million tonnes of bauxite per annum, and produce aluminium ingots with value-added products.

Mahanadi Coalfields plans to inject INR 10,222 crore as equity, considering the project's debt-equity mix of 70:30. Hence, it seeks exemption from the investment limit of 15 per cent of the project's net worth, as pre-determined by the Department of Public Enterprises.

This new project venture of Mahanadi Coalfields follows India's commitment in COP-26 at Glasgow to make the country net-zero carbon emissions by 2070. That was when Coal India decided to diversify its core business from coal mining to aluminium and solar to ensure a sustainable source of income from other businesses.

Since coal and alumina are the two critical raw materials for aluminium production, this project is an ideal choice for future integration. In addition, India's ongoing aluminium demand growth at a CAGR of 10 per cent over the last five years, driven by automobile, construction, and power sectors, inspired this new project.

According to Mahanadi's feasibility study, a new aluminium smelter is must to meet the exponential domestic demand. The study also showed a demand-supply gap of 2.25 million tonnes in 20230 by when the integrated aluminium project would be up and running.

This project is also inspired by Atmanirbhar Bharat's goal of increasing domestic manufacturing, reducing import dependency, and increasing exports to backward areas of the country.