Nalco zeros in on Oman, Iran, Qatar for $2bn smelter unit

India's state-owned aluminium producer National Aluminium Co (Nalco) has zeroed in on three locations in the Arabian Gulf - Iran, Oman and Qatar - to set up a nearly US$2bn smelter unit. Iran is the frontrunner to host the new facility.

Nalco has been on the look out for a location abroad to build the 500,000 metric tonnes-per-year aluminium smelter. The company also considered potential sites in South East Asia and the UAE, in addition to Iran and Oman.

According to latest available reports, Nalco is in advanced stages of discussions to explore the possibility of setting up the smelter in Iran. The company will also visit Oman and Qatar to work out the best place to set up the project.

Low power and infrastructure costs are among the key considerations of Bhubaneswar, Odisha-based Nalco, which has worked out a cost-management strategy to sustain profitability in the aluminium market that is getting influenced by surplus production in China.

"Three factors push up the production cost of aluminium in India - energy, labour and freight. We want to take these three advantages in the international markets. So, we are searching for a place where we can manage costs, and in West Asia these benefits are available. We are now weighing among Iran, Oman and Qatar, with Iran being a frontrunner," Tapan Kumar Chand, chairman and managing director of Nalco, told the Telegraph newspaper.

"We are planning to send a team in May," Chand said, adding that the final decision could be taken in the next two to three months.

Accoding to the industry sources, Nalco's investment to set up the smelter will depend on the power arrangement for the unit. "If we can get direct power, with a long-term agreement, then we will only go for the smelter unit. If we go only for the smelter unit, the cost can be around US$1.8bn-1.94bn. But if we have to go for a power plant, the cost will be higher," Chand added.