The company will discuss forming a joint venture with the IMIDRO, said T.K. Chand
Mumbai: India’s National Aluminium Co. Ltd (Nalco) executives plan to visit Iran this month for initial talks to build a $2 billion smelter in the Middle Eastern country, the first pick on its three-nation short list.
The company will discuss forming a joint venture with the Iranian Mines and Mining Industries Development and Renovation Organization, or IMIDRO, T.K. Chand, chairman and managing director of National Aluminium, or Nalco, said in an interview at his office in Bhubaneswar.
“Our consultant has shortlisted Iran, Oman and Indonesia for the smelter," Chand said. “We have started discussions in order of preference starting with Iran. We will take a view on all countries and shortlist one taking into account the availability of gas and energy for making cost competitive power."
Strong trade relations and a rupee trade system between India and Iran, as well easing global sanctions, make the Middle Eastern country a preferred choice, Chand said. Nalco is bullish about Indian demand, with per capita consumption forecast to grow to about 5 kilograms to 6 kilograms in the next five years from about 1.8 kilograms now, he said.
Nalco gained 0.3% to ₹ 32.35 in Mumbai Wednesday. The shares have declined 40% this year. Profit fell 40% in the June quarter as energy costs climbed and aluminum prices slumped to six-year lows.
Cheap imports into Asia’s third-biggest economy from the Middle East and China, and plunging prices because of global oversupply, have made smelters economically unviable, according to Vedanta Ltd.
The planned visit follows talks with Iranian officials in India and Nalco is also looking to state-run company IMIDRO as a possible long-term supplier of gas for the 500,000 metric ton smelter, Chand said.
Domestically, Nalco is planning to invest about $6 billion in setting up a 500,000 tons smelter and power plant in Gujarat and three refineries totaling 2.5 million tonnes of capacity in Odisha and Andhra Pradesh, Chand said. “We are looking to bid for coal and bauxite mines in Odisha and Gujarat in auctions to ensure linkages to our planned projects."
The company also plans to commission 120 megawatts of power generation through two plants in Maharashtra and Madhya Pradesh this year, Chand said.
“The aluminum industry is undergoing the toughest time now," Chand said. “There has been a strong supply pressure and that is why prices have come down. This situation is likely to continue for the next one or two years."
Aluminum for delivery in three months on the LME traded 0.3% lower at $1,596 a ton at 7:51 am in Mumbai. The metal plunged to $1,506 on 24 August, the lowest since June 2009 and prices are down 23% in the past year. Prices will slump further, averaging $1,475 a tonne in 2016, according to Austin, Texas-based research company Harbor Intelligence. Bloomberg