Nalco may shift site of its 2nd aluminium project in Orissa

Looking for new locations in Sambalpur, Sundergarh, Bolangir for Rs 16,000 cr aluminium, power complex.

The endorsement of capacity expansion proposals of Vedanta Aluminium Ltd (VAL) and Hindalco by the single window clearance authority of the Orissa government has virtually sealed the fate of the Rs 16,000 crore smelter cum power complex (SPC) proposed by National Aluminium Company (Nalco) at Jharsuguda.

VAL and Hindalco, who have their smelter cum power projects located at Jharsuguda, have been permitted to scale up the aluminum smelting capacities of their proposed ventures from 0.25 million tonnes to 1.6 million tonnes and from 0.146 million tonnes to 0.36 million tonnes per annum respectively.

The single window authority has recommended their cases for the final approval of the high level clearance authority headed by chief minister Naveen Patnaik yesterday.

With the state government earlier entered into a pact with a joint venture firm promoted by L & T and Dubal for a 0.3 million tonne aluminium plant also at Jharsuguda, the total aluminium capacity proposed by various companies, excluding Nalco, in the Jharsuguda region is now pegged at 2.2 million tonne.

However, the Nagpur based National Environment Engineering Research Institute (NEERI), which was conducting a carrying capacity study for the Jharsuguda region in view of the pollution threat there arising out of rush of investment proposals in the field of aluminium, steel and power sectors, in its interim report has capped the total aluminium capacities to be permitted in the region at 2 million tonnes.

Hence, the scope of Nalco setting up its project, comprising a 0.5 million tonnes per annum aluminium smelter and a 1260 Mw captive power plant (CPP), at Jharsuguda appears very bleak, pointed out a company official.

Nalco had written to the state government pleading that if the government did not allow massive capacity expansion proposed by some of the private players, then Nalco can put up the project at Jharsuguda while maintaining the overall cap of 2 million tonne for the region. But its plea has been ignored by the single window authority.

Meanwhile, the public sector aluminium major has already started looking for alternative sites for its project. It recently sent teams to Sundergarh, Sambalpur and Bolangir to scout for new location. The teams have collected datas on availability of land, water sources and transportation facility etc and these are being assimilated. “In case of re-location, we have to see that the viability of the project is not affected”, said B.L. Bagra, director, finance, Nalco.

The company had chosen Jharsuguda as the possible site for the plant as it was in the vicinity of the IB valley coalfields. This apart, given the backdrop of problems in land acquisition for industrial units in Orissa, the land required for the project was expected to be trouble-free as most part of the identified patch was government and barren land.

The company fears, moving the project to another location will mean going farther from the coal mines which will push up the cost of transportation of coal, a key raw material.

Ironically, among all companies who proposed to set up aluminium smelter at Jharsuguda, Nalco was better equipped to implement it successfully as the company has surplus alumina to feed the project.

While Vedanta’s alumina plant at Lanjigarh is facing environment issues, Hindalco and L & T- Dubal are yet to set up their alumina projects in the state. In contrast, Nalco’s Damanjodi refinery, which is undergoing expansion, is expected to have one million tonne of surplus alumina which can be easily converted to produce 0.5 million tonnes of aluminium, sources said.