National Aluminium Company (NALCO) is planning to locate its proposed 5-lakh-tonne aluminium smelter project along with the power project in East Kalimantan province in Indonesia. The smelter coming up with a power plant, is expected to cost $4 billion (approx Rs 18,600 crore).

An in-house feasibility study, validated by M N Dastur & Company has favoured East Kalimantan. NALCO has roped in ICRA Management Services to prepare a due diligence report which is likely to be ready by February 2010.

The proposed smelter is expected to be dependant on bauxite import from India. It is likely to source coal from local reserves to run the proposed 1,250 MW captive power plant.

MEC Coal and MEC Infra, two SPVs set up as a JVs between the Ras Al Khaimah Investment Authority (RAKIA) and the local Indonesian authority, are involved in the coal mining and building of rail and port infrastructure in East Kalimantan.

RAKIA plans to pick up 24 per cent equity stake in the smelter project. NALCO may allow RAKIA a minority stake in the power project too. RAKIA's arm, RAK Minerals and Metals Investments, has signed an MoU with NALCO for the smelter project. Under the MoU, RMMI is likely to provide 5 million tpa of low sulphur thermal coal to manage the energy needs of the smelter.

Also See:

NALCO refinery expansion project faces delay (23-Dec-09)