India’s state-run National aluminium Company (Nalco) may postpone the construction of an aluminium smelter in Indonesia due to problems in securing coal supplies for power generation, an official said Tuesday.
The company plans to build five power plants generating 250 megawatts each to sustain a US$3 billion investment in an aluminium smelter in Tanjung Api-api, South Sumatra.
A total of 5 million tons of coal is needed per year to run the power plants.
In its proposal submitted to the Investment Coordinating Board (BKPM), Nalco plans to commence construction in 2010 and expects to complete the construction in a year.
Upon completion, the smelter will have a production capacity of 500,000 tons of aluminium ingots per year.
However, the Industry Ministry’s director for metal industries, I Gusti Putu Suryawirawan, said
the inability to secure coal stemmed from the fact that existing contract agreements for coal purchases had already exhausted estimated coal output for a considerable period to come.
Gusti confirmed there might be a delay in the commencement of Nalco’s project because of the supply issue.
“Several mining companies are being gathered, but their combined coal output is still insufficient,”
“However, we’ll try to keep the smelter construction plan on schedule.”
Domestic demand for aluminium products has been riding a high in the past few years, thanks in part to encouraging growth in the property industry and automotive industry, said Indonesian aluminium Association chairman Abu Bakar.
Besides Nalco, Russia’s Russal - the world’s leading aluminium producer - and Iceland’s North Hydro have also expressed interest in building aluminium smelters in Indonesia, Putu said.
He added Russal was likely to invest $2 billion to build a smelter in West Kalimantan, while North Hydro would use geothermal power plants for energy.
Putu said that although he had heard no follow-up from Russal or North Hydro, which also submitted their proposals to the BKPM at the same time as Nalco did, he remained confident they would not back out of their plans.
He added opportunities to build an aluminium smelter here were very high, thanks to domestic consumption increases of 9 to 12 percent a year.
aluminium ingots have long been supplied to the domestic market by PT Indonesia Asahan aluminium (Inalum), which runs the country’s only aluminium smelter at present.
Inalum imports 600,000 tons of raw aluminium each year.
Its smelter is in Kuala Tanjung Asahan, North Sumatra, and has an annual yield of around 240,000 tons of aluminium ingots - far from enough to meet the annual domestic demand of 300,000 tons.