India’s largest aluminum maker, state owned National Aluminum Company (NALCO), and United Arab Emirates government-linked RAK Minerals and Metals Investment (RMMI) plan to invest $4 billion to build a smelter and supporting infrastructure, including a power plant, in Tanjung Api-api, South Sumatra, Indonesia. $2.5 billion of the planned investment will be spent on the smelter and the remaining $1.5 billion on a power plant, a port and railway. The smelter is designed to process 1 million tons of alumina a year and is expected to produce 0.5 million tons of aluminum annually. The alumina will be imported from India, which produces about 2.1 million tons of alumina per year. The proposed dealwill see RMMI taking a 24% stake in the Sumatran based project signed by NALCO & the Indonesian province last December.
RMMI signed a seperate infrastructure investment deal in February with the South Sumatran Government. This involves the Emirates firm investing into the Tanjung Api-Api industrial city project, which encompasses a new seaport, railway infrastructure & industrial complexes for the exploitation of coal, rubber & palm oil resources. In return for the investment, RMMI will receive fast track approvals for land acquisition & associated planning developments, additionally, the MOU commits the Sumatran Government to facilitating the acquisition of mineral off take agreements, as South Sumatra is the largest coal producing area in Indonesia, this is a very attractive deal for RMMI.
Madhu Koneru, Managing Director, RMMI, said: ‘This is one of the most exciting turnkey projects that RAKIA is undertaking and we believe that it has the potential to become a catalyst for our future organic growth in Asia. We are getting extra ordinary support and encouragement from Governmental authorities and leaders of Republic of Indonesia, including the citizens and regional administration of Banyu Asia regency and South Sumatra Province, which can help RAKIA and RMMI to implement this project within record time.’
Nalco, India’s key aluminium producer and a public listed company (BOMBAY – NALU) – in which the Government of India holds majority stake, has 25 years of experience in mining bauxite, alumina refining, power generation and aluminium smelting. The company operates an opencast bauxite mine of 4.8 million mtpa, which serves the alumina refinery at Damanjodi. The capacity of the mine will go up to 6.3 million mtpa by middle of next year under an expansion project that is currently in progress. The excess capacity of alumina refining, will be used to feed the new project in Sumatra.
“The smelter requires a lot of electricity and we have a lot of energy in India…but still we find that it make senses to put the power plant near coal mining here in Indonesia,” B.L. Bagra, NALCO’s director, told reporters. He said the power plant will help to keep the cost of production from the aluminium smelter competitive.