NALCO’s announcement of INR 30,000 crore (USD 3.45 billion) investment in aluminium business expansion brought to the public by Union Minister of Coal & Mines and Parliamentary Affairs, Pralhad Joshi, is its first major capex in recent times, including setting up an INR 17,000 crore (USD 1.95 billion) aluminium smelter capacity.
State-owned Navratna PSU, National Aluminium Company (NALCO), has chalked out a distribution plan for its progressive INR 30,000-crore expansion plan, marking its first massive capital expenditure in contemporary times. The development project is set to conclude by FY30, with an INR 17,000-crore investment in an additional aluminium smelter construction and noteworthy projects in mining and downstream product manufacturing. Global mining leader Rio Tinto Canada has officially joined as a technology partner for this groundbreaking initiative.
To finance the large-scale capex, NALCO, a debt-free CPSE, will need to raise funds, targeting a debt-equity ratio of 70:30, according to sources. Additionally, INR 13,000 crore (USD 1.497 billion) will be allocated for a joint venture with NTPC to secure 1,200 MW of captive power, with 25-30 per cent coming from renewable energy sources.
Chairman and Managing Director Brijendra Pratap Singh has made a declaration that the plans have obtained the essential approvals, and Engineers India Ltd (EIL) is devising the framework. The smelter, which will have a anticipated capacity of 0.5 million tonnes per annum (mtpa), is envisioned to operate from FY30. Opening investments will start in FY27, with prime expenditure strategised between FY28 and FY30.
For power needs, NALCO is in discussions with NTPC concerning funding assistance for the INR 13,000-crore power plant, with potential modifications in financial figures. In the interim, the company is considering adding casting plants for aluminium production.
In the mining segment, NALCO continues its alumina refinery expansion, with INR 2,000 crore (USD 230.36 million earmarked for capital expenditure in FY25. This includes INR 1,700 crore for a fifth-stream alumina refinery expansion, which 70 per cent is expected to be complete and to be commissioned by December 2025, targeting an output of 700-800 kt in FY27.
The expansion will also lead to a significant boost in alumina refinery capacity, with plans to add an additional 1 million tonnes per year to meet increasing demand. In the mining sector, NALCO is developing the Pottangi bauxite mines, increasing its bauxite production capacity from 7.3 mtpa to 10.5 mtpa. This move is expected to enhance the company’s raw material security, ensuring steady production for its refining and smelting operations. The overall capacity expansion in aluminium smelting by 0.5 mtpa will further strengthen NALCO’s position in the global market.
Analysts at Motilal Oswal noted that while NALCO’s aggressive expansion could significantly boost production capacity, execution risks, cost escalations, and regulatory challenges remain key concerns. Despite a positive long-term demand outlook for aluminium in India, near-term market fluctuations and production constraints could impact earnings.
Beyond boosting production, this expansion is anticipated to create thousands of direct and indirect jobs, providing a substantial economic stimulus to local communities.
As one of India’s key public sector enterprises, NALCO plays a vital role in the country’s “Aatmanirbhar Bharat” (Self-Reliant India) initiative. The government has shown strong support for this project, with Union Minister for Coal & Mines, Pralhad Joshi, emphasising its importance in achieving self-sufficiency in aluminium production. By expanding its operations, NALCO is set to contribute significantly to India’s growing demand for aluminium in infrastructure, manufacturing, and defence.
