Nalco's Rs 10,000-cr Iran aluminium project remains a non-starter

Nalco's plans to spread its arms across the globe aren't taking shape the way it had expected them to. The company's Rs 10,000-crore project to set up a 310,000-tonne aluminium smelter and a 750-Mw power plant in Iran continues to languish due to paucity of funds

"The geo-political situation in Iran is not favourable, due to which we have not been able to proceed with the financial closure for the project," said B L Bagra, acting chairman and managing director, and director (finance).

The project was announced in 2007 and the total project cost then was Rs 8,000 crore, which now stands in excess of Rs 10,000 crore. Nalco had planned to ship bauxite from its Indian mines to Iran and convert it into aluminium. It had signed a memorandum of understanding with Iran's Kerman Development Organisation, but an agreement to form a joint venture hasn't been floated yet.

In the meantime, Nalco had held talks with various financial companies, including the Islamic Bank of Indonesia, which had shown interest in financing the project. The talks, however, did not succeed.

"The project is on hold," said Bagra, not giving any timeline for a possible take-off.

This is not the first overseas project of Nalco to hit a roadblock. Around the same time when the Iran project was announced, the company spoke of setting up aluminium smelters in South Africa and Saudi Arabia. The African project was a Rs 15,000 crore, half a million tonne smelter, and a 1,250-Mw power plant.

The Saudi Arabian project was shelved at the planning stage and no details on the proposed capacities were given. The company reasoned lack of coal linkages for its decision.

Of the four international projects announced, only the Indonesian smelter is close to getting started. Nalco is expected to choose its coal partner this month. It is looking to set up a 0.5 million tonne aluminium smelter and a 1,250-Mw power plant at a cost of $4 billion.