National Aluminium Company (Nalco), the Orissa-headquartered and central government-owned company, has turned out to be the sole final bidder for Gujarat Mineral Development Corporation’s (GMDC) Rs 15,000-crore aluminium project in Kutch, Gujarat.
V S Gadhvi, managing director of GMDC, which is owned by the government of Gujarat, told Business Standard, “Two months earlier, we had asked the four shortlisted companies for financial terms. Only Nalco has responded. More or less, the joint venture will be with Nalco for the project,” cautiously adding, “subject to detailed scrutiny”.
The company would take a fortnight to evaluate Nalco’s financial terms and then put the matter before its board of directors. “By December, the board should be able to finalise and then the project will be sent to the government for its approval,” he said.
The project is for a million-tonne alumina and 500,000- tonne aluminium smelter and GMDC will supply bauxite from its mines in Kutch. The total project cost is expected to be around Rs 15,000 crore.
The nine companies that had shown interest through Expression of Interest (EoI) letters were Hindalco Industries, Gujarat Foils, JSW Aluminium, Nalco, Aluchem (USA), Dubai Aluminium, Jaiprakash Associates, Adani Group and Jindal Steel and Power. Gujarat Foils had partnered with Rusal of Russia, the world's largest aluminium maker, to bid.
An official from one of the bidding companies said the bauxite quality at GMDC's mines in Kutch was not very good. "The bauxite is of low quality and that will increase the cost of production of alumina and aluminium,” he said.
An official from another major aluminium maker said, "The project was not feasible for us. While we would have made all the investments, GMDC would own a significant minority stake because it was supplying the raw material."
Vedanta Aluminium did not even put in its EoI on the grounds the bauxite deposits in the state are very less and an investment of that size would be unfeasible in the long run. GMDC's mines to support the plant has bauxite reserves of 25-30 years.
The project has been mired with delays from the beginning. Ashapura Minechem, a bauxite miner and exporter was supposed to set up the plant earlier with GMDC. However, the company could not execute the project and the MoU expired and GMDC invited fresh EoIs.
Even shortlisting of the project was delayed by close to a year. GMDC had announced the project last calendar year and was supposed to shortlist companies by January 2011. However, consistent delays in evaluation, coupled with other administrative issues, forced the company to go slow on the process.
The last date for giving EoIs was extended twice, as GMDC failed to get favourable responses. November 29 last year was the final deadline and nine companies had responded. Of the nine, GMDC shortlisted four companies by January.
