Nalco to invest Rs 900 crore in Kakrapar Atomic Power plant

Aluminium major Nalco will invest around Rs 900 crore in Kakrapar Atomic Power project to acquire 26% stake in the plant with plans to increase it to 49% later.

The state-run firm has been for quite some time exploring opportunities to enter power sector in a bid to secure an uninterrupted power supply for its aluminium production facilities, a senior government official said.

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It takes around $1,500-1,700 to produce one tonne of aluminium with alumina and power accounting for 40% each of the cost, with raw materials and others contributing to the remaining 20%.

The Navratna firm's Board has approved acquisition of 26% stake in Kakrapar Atomic Power Project for around Rs 900 crore through its joint venture (JV) with Nuclear Power Corporation of India (NPCIL) -- NPCIL-NALCO Power Company, the official added.

Confirming the development, another official said: "Kakrapar is the first project of the JV and the plans are to increase this stake to 49% for which approval of the ministries of Finance, Mines among others has been sought."

Nuclear power is considered the future and with depleting fossil fuel resources as well as hardening of environmental concerns, this source of power is going to be one of preferred alternatives for aluminium production, he added.

The equity infusion in Kakrapar will be made after the project is allotted to the JV firm by the government.

Besides, the public sector undertaking (PSU) is scouting for opportunities to set up a gas-based thermal power plant and an aluminium smelter in Iran, Qatar and Oman.

Nalco faces a daunting challenge of keeping operational and raw material costs in check to stay competitive even as it tries to expand capacity to take advantage of a infrastructure boom in India.

Demand from power sector is on the rise as the government sharpens its investment focus on power transmission. Also, an expected demand from transport, building and construction sectors would further increase consumption for the metal.

Construction of smart cities and rising consumption for products such as beverage cans, alloy wheels, automobile bodies and railway coaches could also act as a catalyst.

Nalco expects India to double its aluminium consumption to five million tonnes in the next four years.