Hindalco, Vedanta want a piece of CIL project in Odisha

The world’s biggest coal producer recently invited expressions of interest (EoI) for equity partners in the project that includes bauxite mining, alumina refinery and aluminium and an associated coal preparation plant.

“Most domestic companies are interested, including Vedanta and Hindalco, as equity partners," one of the two officials said on condition of anonymity. “During the pre-bid conference, parties from the Gulf showed interest. Actually, a lot of electricity is required to produce aluminium, and in the Gulf, electricity production using gas is cheaper. But they don’t have bauxite, so they buy alumina from India, which is made from bauxite, and use it to produce aluminium with cheaper electricity and sell it worldwide. Now, they have shown some interest in our plant," the official added.

A second official said the government is ready to offer a majority stake and management control in a special purpose vehicle (SPV) that will implement the proposed aluminium project to the chosen private entity.

Queries sent to the coal ministry, Coal India and Vedanta Aluminium, a unit of Vedanta, and Hindalco remained unanswered till press time.

Mint reported on 20 June about Coal India’s planned diversification into aluminium, solar power and coal gasification in a bid to decarbonize its operations. The company is awaiting approval for the allocation of a suitable bauxite block at Sijimali or Kutrumali in Odisha. A state government panel chaired by chief minister Naveen Patnaik approved the project in December.

Coal India has also conducted a site visit in Rayagada district, the proposed site of an alumina refinery, and Neulapoi, the proposed site of a smelter and coal preparation plant.

Initially, Coal India planned a joint venture with National Aluminium Corp. Ltd (Nalco), wherein Mahanadi Coalfields Ltd, a unit of the state-run miner, was to hold 74% stake and Nalco the rest. Further, alumina and coal for the project were proposed to be supplied by Nalco and Mahanadi Coalfields, respectively. The plan was, however, dropped in August, following which a plan to build the integrated greenfield aluminium project was mooted.

In October, Coal India also approved a pre-feasibility report for building the integrated greenfield aluminium project by Mahanadi Coalfields.

Decarbonization process gained momentum at state-run firms after the government began focusing on push towards energy transition and set a net-zero carbon emission target for 2070.

Coal India’s aluminium plans come at a time when fears of a recession have rattled the global aluminium market. Prices of the metal used in a wide variety of industries, including aircraft manufacturing, automobiles and packaging industry, were elevated till April due to concerns of lower supplies from Russia following the war with Ukraine, and at a time when China and Europe were reducing their own production. However, prices have since declined amid worries of a global slowdown and a subsequent impact on demand.