Nalco to buy stake in Indonesian coal mine by July end

National Aluminium Company today said it will decide on buying stake in an Indonesian coal mine by July-end after going through the due diligence report.

"IFCI will submit the due diligence by the first week of July. After going through the report, we will take our call on buying stake in the mine. This might be by July-end," Nalco's acting Chairman BL Bagra told PTI.

Getting coal access is the key for Nalco's proposed $3.9 billion aluminium smelter project in Indonesia. It plans to set up a 0.5 mtpa smelter and 1,250 MW coal-based captive power plant at East Kalimantan province in Indonesia.

Buying stake in a coal mine would ensure long-term supply of the dry fuel to its project. The alumina smelter project, the company had earlier said, would be funded with debt-equity ratio of 70:30.

Bagra said that following the acquisition of stake, which would be a minority one, in the coal mine, Nalco would start the process of preparing the detailed project report (DPR) on the aluminium project.

"The DPR will take 6-7 months to prepare (following its buying stake in the coal mine). After that, we will seek the approval of the Board for investment in the smelter project by March 2012," he said.

Indonesian government-owned mining firm Pte Antam has already evinced interests to buy a minority stake in smelter project, Bagra said, adding that the proposed facility was to be set up through a step-down Nalco subsidiary.

Nalco, which is nearly 87% government-owned, is the largest producer of alumina and second largest producer of aluminium in the country. It is self-sufficient in the entire value chain, which includes mining of bauxite, refining of bauxite into alumina, captive power plants and smelting of alumina into aluminium.