NALCO sees progress in securing new mining lease

NEW DELHI (Reuters) - State-run National Aluminium Co Ltd has made headway in securing a bauxite mining lease from Andhra Pradesh, which could be the key to setting up a new greenfield aluminium smelter.

"We have applied for the mining clearance. They (Andhra Pradesh) have said they are willing to give it," NALCO chairman C.R. Pradhan told Reuters over the telephone.

He did not elaborate on the investment the company is considering in Andhra Pradesh if the lease is secured.

NALCO has been looking to set up a new greenfield smelter and is likely to choose either Orissa, where it already operates a mine and a smelter, or Andhra Pradesh.

Obtaining further raw material sources is vital for the company's expansion plans, and would help the firm maintain its edge as one of the lowest cost aluminium producers in the world.

Pradhan said the company was on track to achieving a brownfield expansion that will lift its annual aluminium production capacity to 460,000 tonnes by the end of 2008 from the current level of 350,000 tonnes.

The company chairman said little progress had been made in finalising production facilities overseas, despite efforts to establish one in countries such as Indonesia.

NALCO has been looking to build an aluminium plant overseas with 350,000 tonnes annual capacity, along with a power unit capable of generating 1,300 MW.

Another NALCO official said the company had floated an alumina sale tender for 30,000 tonnes, which will close next Tuesday.

Spot alumina prices are ruling at $385-$390 per tonne.

Last month, the company sold 300,000 tonnes of alumina at 12.88 percent of the London Metal Exchange aluminium price over the next one year.