B L Bagra, director (finance) and presently the officiating chairman and managing director of government-owned National Aluminium Company (Nalco), talks to Jayajit Dash on issues involving the aluminium industry and the company. Edited excerpts:
What are the opportunities for Nalco in terms of developing downstream capacities around the smelter plant and utilising low grade bauxite?
There are three issues involved. The grade of bauxite has direct bearing on the cost of production of alumina, the first intermediary product that goes into the making of the metal. Besides, disposal of the waste, called red mud, which at times contain traces of caustic soda, becomes an issue. We do not have low grade bauxite as of now.
On the development of downstream industries around our smelter plant, we have tied up with Idco (Industrial Infrastructure Development Corporation of Odisha) to develop an aluminium park adjacent to the smelter.
Is Nalco facing challenges as an aluminium producer, say, in terms of bauxite mining in forest areas, efficient fly ash management, spurt in input and fuel costs and disruptions in coal supply?
There are no problems in continuing mining at the present location in Koraput (Panchpatmalli mines), raided by Naxalites three years before. Management of fly ash generated from thermal power stations is an issue all power plants in Talcher are grappling with. We have undertaken a project to transport ash from the captive power plant in lean slurry mode to a mines void in the Talcher coal fields. We hope to complete the project by the end of this year. Besides, we are in touch with the National Highways authorities for use of ash in highway widening. We are also filling a few abandoned stone quarries in and around the plant.
The spurt in input raw material and fuel costs have definitely impacted our operations adversely. While the cost of production has gone up, the price of the metal has not kept pace, but has remained in the $1,800-2,200 band. This is exerting pressure on our margins. With closure of about eight to 12 per cent capacity globally due to reasons of low margins, it is expected the price should rebound towards the second half of the year.
Coal supply shortage has hit the country hard, especially in the past couple of years, and Nalco is no exception. Operations like ours need continuous and regular supply, since we cannot resort to load shedding like a utility power plant. Last year, we were forced to cut our metal production by around 10 per cent, owing to shortage of coal, which hit the top line.
What is the growth outlook for the company?
We have a new project, of a one-million tonne alumina refinery, based on bauxite from the Kutch area of Gujarat, at an investment of Rs 4,200 crore. It should be commissioned in another four years. Our first wind power project is to take off very soon and we hope to have the 50 Mw project commissioned before the end of this year. Another 50 Mw wind power project should be finalised for award within a month.
