Nalco to focus on merchant mining, bid for bauxite blocks in Jharkhand, MP

As part of its corporate diversification strategy, National Aluminium Company (Nalco) has identified merchant mining as its next key focus area. Along with commercial mining of bauxite, the navratna public sector unit (PSU) is eyeing the acquisition of cobalt and lithium abroad. 

Traditionally, Nalco's focus has been on the alumina and aluminium business, though the company has diversified to wind power and is actively pursuing upstream integration plans like caustic soda and coal tar pitch plants. Alumina sales, which contribute nearly three-fourths to Nalco's Ebitda (earnings before interest, taxes, depreciation and amortisation), have driven its profitability over the years. 

"We are attaching huge emphasis on merchant mining. Nalco is gearing up to participate at the auctions of bauxite blocks on offer in the states of Jharkhand, Chhattisgarh and Madhya Pradesh. With its proven expertise in captive bauxite mining and its entire value chain, Nalco can effectively take up mining on a commercial scale and meet the requirement of domestic industries," said T K Chand, chairman & managing director, Nalco. 

As many as 21 bauxite blocks are lined up for auctions by the mineral-rich states. 

Nalco is also looking beyond Indian shores to secure bauxite reserves. The aluminium firm is eyeing some prized deposits in bauxite-laden Guinea. A delegation from Nalco is set to visit Guinea to evaluate the possibilities. Nalco is even contemplating installing an alumina refining unit if it manages to win a bauxite block in Guinea. Guinea's bauxite is considered to be the best in the world as it contains a very low amount of reactive silica that obviates the need for beneficiation or washing of the ore. However, despite being endowed with ample reserves and a flourishing bauxite mining industry, Guinea lacks the facilities to process the aluminium ore. Besides, sporadic incidents of political unrest have disrupted bauxite mining and its movement.

If Nalco manages to acquire bauxite mines and install an alumina refining unit in Guinea, the company can hope to harvest good returns and profitability from alumina sales. Australia, another bauxite-rich destination, also features on Nalco's radar for overseas assets.  

Apart from bauxite, Nalco aims to acquire cobalt and lithium overseas as the two minerals are scarcely available within the country. "Both the minerals can be blended with aluminium to make high-end alloys that can meet futuristic applications. Securing them would also mark a step towards making Nalco globally competitive," Chand said.

Given their scarce deposits in the country, Nalco has identified 12 strategic minerals -- tin, tungsten, titanium, gallium, lithium, tantalum, cobalt, niobium, selenium, and indium -- for overseas acquisition. A joint venture (JV) company -- Khanij Bidesh Nigam Ltd (KABIL) -- has been forged by Nalco with two other central public sector enterprises -- Hindustan Copper Ltd (HCL) and Mineral Exploration Corporation Ltd (MECL). The JV is tasked with identifying, exploring, acquiring, developing and processing the strategic minerals overseas for commercial use and for supplying to India to meet the domestic requirement.

The JV firm would hunt for such mineral assets primarily in South Africa and other African countries. It can either go for outright buyouts of the assets or forge tie-ups with local companies there. The objective is to make the country self-sufficient in such minerals.    

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