Nalco proposes Rs 9,000 cr investment in Vizag

Public sector National Aluminium Corporation(Nalco) has finally woken up to present its case before the Andhra Pradesh government amidst growing competition for bauxite reserves in Visakhapatnam from big private players.

According to government sources, Nalco has proposed to invest over Rs 9,000 crore to set up alumina and smelter plants in Vizag provided it is permitted to mine bauxite ore directly. The company's representatives met the state government officials a couple of days back to request for allocation of bauxite reserves and gave a presentation on the company's plans.

Of the 600-plus million tonnes of bauxite reserves available in this area, the state government has already allocated 240 million tonnes to the Jindal Group, which proposed to set up aluminium refinery and smelter plants with an investment of Rs 9,000 crore.

Though the talk of tapping bauxite reserves in Vizag was doing the rounds for decades, the actual rush began only after Jindals signed a memorandum of understanding (MoU) with the state government to set up projects at Vizag. Besides Jindal, the state government intends to accommodate one more company to tap the bauxite reserves in the remaining area.

Australia-based BHP Billiton recently approached the state government for allocation of more than 300 million tonnes of bauxite reserves while Essar Group and one more company is also said to be in the fray.

Even though, the state government earlier maintained that it would give preference to the public sector Nalco before considering any other proposal, the situation doesn't appears that easy as the company has to fulfil certain pre-conditions put forward for the allocation of bauxite reserves.

In fact, Nalco representatives were understood to have rejected most of the conditionalities put forward by the state government. Investment figures given by Nalco were also considered quite low as compared to what the government expected from the public sector behemoth.

While the state government wants the companies to buy bauxite ore from Andhra Pradesh Mining Development Corporation(APMDC), which is to secure mining leases for the entire area, Nalco representatives told the government officials during the meeting that the company has to be permitted to get mining licences in the allocated area instead of depending on the state government agency, officials said.

Nalco officials stated to have expressed their reservations to another clause, according to which the company should agree to spend 0.5 per cent of its total revenue from the project on the development of local people, especially tribals.

Besides these clauses, the government is asking the companies to spend their own money for getting the forest clearances as huge amount of money has to be deposited in advance with the Union ministry of forest and environment to grow forest in area equivalent to the land allocated for mining operations. Interestingly, Jindal South West(JSW) Holding Limited, which signed the MoU with the state government has agreed to all these conditionalities.

"We have given questionnaire to all the competing companies asking them to give their proposals with regard to the investment and time frame along with other criteria. We will make a comparative evaluation soon after the government receives detailed proposals from all the four companies," a senior government official told Business Standard.