NALCO’s ₹30,000-Crore Expansion Deferred Following Collapse of Rio Tinto Canada Partnership

In a significant development for India’s aluminum sector, National Aluminium Company Limited (NALCO) has postponed its ambitious ₹30,000-crore expansion plan after its technology collaboration with Rio Tinto Canada fell through. The partnership was central to NALCO’s strategy to modernize its operations and enhance its global competitiveness.

Background of the Expansion Plan

NALCO’s expansion blueprint encompassed several key projects:

• Establishing a new aluminum smelter facility with an investment of ₹17,000 crore.

• Expanding mining operations and initiating the production of downstream products by FY30.

The company had planned to commence initial investments in FY27, with peak capital expenditure projected between FY28 and FY30. To support the smelter’s operations, NALCO was in discussions with the National Thermal Power Corporation (NTPC) for a joint venture worth ₹13,000 crore to secure 1,200 MW of captive power, integrating 25-30% renewable energy sources. Additionally, NALCO allocated ₹2,000 crore for capital expenditure in FY25, including a fifth-stream alumina refinery expansion worth ₹1,700 crore, aiming for an output of 700-800 kilotonnes in FY27.

The Role of Rio Tinto Canada

Rio Tinto Canada was expected to provide advanced smelting technology for NALCO’s new facility. Their AP60 technology, known for its low-carbon emissions, and the ELYSIS™ smelting process, which eliminates greenhouse gas emissions by producing oxygen instead of CO₂, were central to the modernization efforts. These technologies align with global trends towards sustainable and environmentally friendly industrial practices.

Collapse of the Partnership

The anticipated collaboration between NALCO and Rio Tinto Canada did not materialize, leading to the deferment of the expansion plan. While specific reasons for the breakdown have not been publicly disclosed, the absence of this partnership has significant implications for NALCO’s strategic objectives and India’s broader ambitions in the aluminum sector.

Implications for NALCO and the Indian Aluminum Industry

The postponement of the expansion plan presents several challenges:

• Technological Setback: Without Rio Tinto’s advanced smelting technologies, NALCO faces hurdles in achieving its goals for low-carbon aluminum production.

• Financial Considerations: The expansion was to be funded with a projected debt-equity ratio of 70:30. The deferment may impact financial planning and investor confidence.

• Strategic Realignment: NALCO may need to explore alternative partnerships or develop in-house capabilities to meet its modernization and sustainability objectives.

Looking Ahead

NALCO’s commitment to expanding its alumina refinery and other projects indicates a continued focus on growth and modernization. The company may seek new technology partners or invest in developing proprietary solutions to align with global sustainability standards. The Indian aluminum industry, amidst increasing demand for green metals, will closely watch NALCO’s next moves in navigating this setback.