28 MARCH 2013Business Standard
Nalco-GMDC unsure of aluminium project size in Gujarat
Edited by : AL CIRCLE
2 min read
After many delays, GMDC’s ambitious $2.75 billion aluminium park in Kutch, Gujarat seems to be stuck in another pit.
Its partner Nalco doesn’t seem too keen on the aluminium smelter.
GMDC wants to set up a 1 million tonne alumina refinery and a half a million tonne aluminium smelter for a total of $2.75 billion.
However, Nalco is wary of the smelter as converting alumina into aluminium requires mega power generation. A top Nalco official on the condition of anonymity told Business Standard, “For the smelter we have put a condition in the bid that GMDC should arrange electricity at a maximum of INR 2.20 per unit. That is the viable power cost for any smelter. So investment in smelter is conditional. If they can arrange electricity at INR 2.20 per unit then they have the smelter, if this is not possible for them to arrange then there will be no smelter.”
BL Bagra, director (finance), Nalco did not reply to queries.
This means that if the two decide against setting up the smelter go only with the alumina refinery, the project cost will come down to $8.9 million from the current projections of $2.75 billion.
As per the tender that GMDC floated, the company would supply bauxite and the chosen partner would make all the investments to set up the refinery.
However, now, GMDC is keen on picking up 26% stake in the joint venture.
In December, GS Gadhvi, chairman, GMDC had told Business Standard that the company can fund this 26% stake buy in the JV through its internal accruals. He had said that the company can even borrow some money, if needed.
The detailed project report will be presented to the board of Nalco in April which will then take a decision on its investment in the joint venture.
The official said that Nalco is keen letting GMDC hold 26% stake in the joint venture as it will ease off the monetary pressure on Nalco.
GMDC had first floated the tenders to find a partner in 2010 but had to advance the deadline twice as it couldn’t find any takers. In November 2011, GMDC finalised on Nalco as a partner for the project and since then the project details are being worked out on a snail’s pace.
Its partner Nalco doesn’t seem too keen on the aluminium smelter.
GMDC wants to set up a 1 million tonne alumina refinery and a half a million tonne aluminium smelter for a total of $2.75 billion.
However, Nalco is wary of the smelter as converting alumina into aluminium requires mega power generation. A top Nalco official on the condition of anonymity told Business Standard, “For the smelter we have put a condition in the bid that GMDC should arrange electricity at a maximum of INR 2.20 per unit. That is the viable power cost for any smelter. So investment in smelter is conditional. If they can arrange electricity at INR 2.20 per unit then they have the smelter, if this is not possible for them to arrange then there will be no smelter.”
BL Bagra, director (finance), Nalco did not reply to queries.
This means that if the two decide against setting up the smelter go only with the alumina refinery, the project cost will come down to $8.9 million from the current projections of $2.75 billion.
As per the tender that GMDC floated, the company would supply bauxite and the chosen partner would make all the investments to set up the refinery.
However, now, GMDC is keen on picking up 26% stake in the joint venture.
In December, GS Gadhvi, chairman, GMDC had told Business Standard that the company can fund this 26% stake buy in the JV through its internal accruals. He had said that the company can even borrow some money, if needed.
The detailed project report will be presented to the board of Nalco in April which will then take a decision on its investment in the joint venture.
The official said that Nalco is keen letting GMDC hold 26% stake in the joint venture as it will ease off the monetary pressure on Nalco.
GMDC had first floated the tenders to find a partner in 2010 but had to advance the deadline twice as it couldn’t find any takers. In November 2011, GMDC finalised on Nalco as a partner for the project and since then the project details are being worked out on a snail’s pace.
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