Hindalco, Essar tie up for MP aluminium plant

Aditya Birla group company Hindalco and Essar will join hands to invest Rs 7,700 crore to set up a greenfield aluminium project. A joint venture firm of the two companies will also set up a power project.

The financial closure for the project has been done with internal accruals of Rs 3,080 crore (40 per cent) and debt of Rs 4,620 crore (60 per cent). The company is also in talks with foreign technology providers for smelter. The project will be commissioned in four phases by 2009.

"Hindalco Managing Director Debu Bhattacharya made a presentation in this regard to Chief Minister Shivraj Singh Chauhan, and the firm will ink the deal with the MP Government on April 5," a government source told Business Standard.

Hindalco, according to government sources, will make a Rs 4,450 crore investment in the aluminium smelter plant while the joint venture firm will invest Rs 600 crore in coal mines and Rs 2,650 crore in a power plant.

The aluminium smelter will have a 325,000 tonne capacity while the power project will have 750 Mw (4X150 Mw and 1X150 Mw standby) capacity. It would be a captive power plant, said the sources.

The plant will have 3.5 million tonne per annum captive coalmines. The Central government had recently allotted Mahan coalmines to Hindalco and Essar, which will be mined under the joint venture. The joint venture has already been signed between Hindalco and Essar.

The smelter plant will be set up on an area of 5000 acres of land in Orgari near Bargawan village of Sidhi district.

"The companies are expecting a Rs 2,800 crore turnover from the new project with Rs 400-500 crore revenue. The new plant will generate 5000 direct and indirect jobs," said the sources.

Utkal Alumina mines in Orrisa will supply the raw material "" alumina to the project, which is again, a joint venture firm of Indal and Canada-based Alcan. The company has assured Orissa's chief minister that this project (Utkal) will be completed within 36 months and there will no issue of raw material supply to MP project.

"The existing Govind Vallabh Pant Sagar or Khakhan nala or Gopad river will be the main source for water supply to the project," said the source.

Hindalco has demanded necessary support in procuring 5000 acres of land, additional land for residential colony, ash bund area, coal mining operation and transportation and land for implementation of rehabilitation package for displaced persons.