National Aluminium Company Ltd has cancelled the coal linkage plan for its captive power plant in Indonesia.
The unit was to power the proposed $4-billion, half a million tonne per annum aluminium smelter in Indonesia’s East Kalimantan province.
Nalco recently communicated the decision to Middle East Coal (MEC), which was to supply five million tonnes of thermal coal a year to run a 1,250-MW plant.
Other options
“In the past 18 months, MEC failed to formalise the supply agreement,” B. L. Bagra, Nalco’s Chairman and Managing Director, told
Nalco’s board will now consider other options, including acquisition of a coal mine in Indonesia.
“Coal-fired power is the key to the proposed energy-intensive smelter project.
There are various options, such as finding another supplier or direct acquisition of a coal asset there… a call on the issue is expected in the near future,” he said.
Nalco could not wrap up the deal with MEC — a joint venture between Ras al Khaima Investment Authority and Trimex group of Dubai — even after short-listing of expressions of interest and an elaborate due diligence exercise.
Bagra said MEC, which holds the concession for 1.5 billion tonnes of coal resources in East Kalimantan province, could not achieve financial closure for its mining project. On this hinged Nalco’s supply agreement with MEC.
Nor could it complete its planned equity restructuring in the intervening period.
Rail corridor
Any equity re-jig would have put the spanner in the works as the due diligence exercise on MEC’s financial bid would have to be repeated.
“We had to terminate the bid and selection process as MEC also did not respond to our repeated inquiries,” Bagra said.
Also stuck are MEC’s plans to build, through a separate entity, a 125-km, 60 mtpa rail corridor linking the mine site to Kalimantan’s eastern coast, where a jetty was to be put up.
Under the MoU, Nalco was to have the right to use this infrastructure for bringing in alumina from India and evacuation of aluminium for export.
The MoU also provided for a share swap between the two project entities, conditional on their commissioning.