Nalco eyes bauxite assets in Guinea, to send team to evaluate opportunity

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National Aluminium Company (Nalco) is looking at the possibility of gaining access to bauxite deposits in Guinea. The West African country is home to a third of the world’s reserves, with an estimated 40 billion tonnes of high-grade bauxite. “If we get mining rights, we can think of setting up an alumina-refining facility there. Nalco will shortly send a team to Guinea to evaluate the possibilities,” said T K Chand, chairman and managing director.

Leading global aluminium companies Alcoa and Rio Tinto Alcan jointly own a bauxite mine in Guinea. No Indian company has a presence there. Vedanta imports bauxite from Guinea for its Lanjigarh (Odisha) alumina refinery. 

The African nation ships around 30 million tonnes (mt) of bauxite each year. Its shipments are expected to double in a year, on the back of a sharp ramp-up in production. 

Guinea’s bauxite is considered to be the best in the world because it contains a very low amount of reactive silica, which obviates the need for beneficiation or washing of ore. 

However, despite being endowed with ample reserves and a flourishing bauxite mining industry, Guinea lacks the facilities to process ore. Besides, sporadic political unrest has disrupted bauxite mining and its movement.

If Nalco manages to acquire bauxite mines and install a refining unit in Guinea, the company can hope for good returns and profitability from alumina sales.

The alumina business has been a key driver of Nalco’s profitability over the years. The navratna company has been exporting, on average, one mt of alumina annually. 

Being one of the low-cost alumina producers in the world, Nalco enjoys good margins on exports, with prices going up. The alumina business fetches better margins for Nalco than all other verticals of its operations.

However, Nalco’s alumina exports are projected to tumble by half in the next three to four years because internal consumption will rise. It has adopted a new plan to manage vagaries in the metals business. The model envisages diversification into green energy, independent power producer, merchant mining and setting up a soda plant — areas  immune to downturn in the metals market. 

Apart from bauxite, Nalco is on the hunt for strategic minerals acquisition abroad. For this purpose, it has formed a joint venture with Mineral Exploration Corporation and Hindustan Copper named Khanij Bidesh India.

The JV is tasked with exploring, identifying, acquiring, developing and processing strategic minerals overseas for commercial use and for supplying to India.

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