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National Aluminium to Acquire Coal Mine in Indonesia to Supply Power Plant

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By Yoga Rusmana

National Aluminium Co., India’s second-largest producer of the metal, is seeking to acquire a coal mine in Indonesia to secure fuel supplies for its planned power plant in East Kalimantan province.

Nalco, as the company is known, seeks a coal mine with 500 million metric tons of resources that can produce 10 million tons annually starting in 2014, the company said in a statement published in the Jakarta Post today. Potential sellers have 30 days to submit offers, according to the statement.

The aluminum producer is expanding overseas to tap rising demand from automakers and builders in emerging markets and China. Vehicle sales in the world’s second-largest economy in the first seven months rose 43 percent from a year earlier to 10.3 million units, according data compiled by Bloomberg News.

Nalco, based in Bhubaneswar, plans to spend an estimated $4 billion to build an aluminum smelter with an annual capacity of 500,000 tons and a 1,250-megawatt coal-fired power plant in East Kalimantan on Indonesia’s part of Borneo island in a joint venture, the company said.

RAK Minerals & Metals Investments, a unit of RAK Investment Authority, holds 24 percent of the Indonesian venture. RAK Minerals is based in the United Arab Emirates.

Nalco needs supply of 8 million to 10 million tons of coal a year, of which 4 million to 5 million tons will be used to feed the East Kalimantan power plant. The company is seeking fuel with an energy value of more than 5,000 kilocalories a kilogram.

Nalco shares fell 1.3 percent to 396.85 rupees in Mumbai trading at 1:56 p.m. local time. The stock has declined 5 percent this year compared with a 2 percent increase in the Bombay Stock Exchange’s benchmark Sensitive Index.