National Aluminium Company Limited has cancelled the coal linkage plan for its captive power plant in Indonesia. The unit was to power the proposed USD 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 which was to supply 5 million tonnes of thermal coal a year to run 1,250 MW plant.

Mr BL Bagra CMD of Nalco said that “In the past 18 months, MEC failed to formalise the supply agreement. 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.”

He said that 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. Nalco could not wrap up the deal with MEC JV 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.

Mr Bagra said that 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.

He said that we had to terminate the bid and selection process as MEC also did not respond to our repeated inquiries. Also stuck are MEC’s plans to build, through a separate entity, a 125 kilometers, 60 million tonne per annum 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.

Source - Business Line.com

(www.coalguru.com)