Odisha based National Aluminium Company (NALCO) plans to set up an aluminium smelter and an associated power plant in Iran worth as much as $2.6 billion once international sanctions against the country are formally lifted.
“We will meet India’s foreign ministry officials and the ambassador of Iran in New Delhi next week to discuss the project. We would prefer a local partner who could supply cheap power to run a 1 million tonne per annum smelter in Iran. Nalco would source alumina as raw material for the plant from its refinery in Odisha,” said Chairman-cum-Managing Director of NALCO Tapan Kumar Chand.
“You can’t remain at the same place. If you don’t grow, competitors will start growing and you will be squeezed out of the market,” he added.
Speaking about the low demand in international market, Chand explained that the multi year low prices for aluminium due to an oversupply would not be a deterrent to the plans.
“The new plant would take 2-3 years to complete and by then demand could improve given the nature of such cyclical industries. Generally producers take the opportunity of such downturns to build up their plant capacities, so that as and when demand picks up, they are in a position to cater to that,” he explained.
It may be noted that last month, six world powers led by US reached a nuclear deal with Iran clearing the way for an easing of sanctions on Tehran. India and Iran, however, have always maintained a close relationship despite the U.S. led sanctions & trade restrictions over Iran’s nuclear programme.
The new plant bears significance given the rapid industrialization in India and increasing domestic consumption. India’s per-capita consumption of aluminium is just about 2.2kg, compared with 25kg in China. But, the demand in the country is growing at an annual rate of about 11 percent against global growth of 6 per cent.
Earlier, NALCO attempted to hunt for a smelter plant in Oman and Indonesia through a consultant, but nothing concrete came out of it.
Nalco, which also wants to diversify into nuclear power production, is nevertheless looking to strengthen its raw material supply chain. It expects Odisha to give it the go-ahead for a new bauxite mine in the next few months that will help it to start work on another 1 million tonne per annum alumina plant at a cost of about $867 million.
The company, which has the capacity to produce 2.28 million tonnes of alumina a year from naturally occurring bauxite, is also in talks with officials in Gujarat to set up another 1 million tonne a year alumina refinery there.