In a major set back for Gujarat's ambitious ₹15,000-crore aluminium park in Kutch, the Navratna Central PSU, National Aluminium Company Limited (NALCO) has asked the Gujarat Mineral Development Corporation Ltd (GMDC) to drop the proposed 0.5 million tonnes per annum (TPA) aluminium smelter plant.

GMDC, in its 54th annual report for 2016-17 released after the company's Annual General Meeting on September 29, stated that based on a detailed project report for the alumina refinery and smelter plant in Kutch, GMDC and NALCO "mutually decided not to proceed with the project." GMDC was likely to get 26 per cent equity partnership in the JV.

"Land required for the project has been allocated by State government and part possession has been taken. Process for obtaining possession of remaining portion of land also is under progress. Detail Project Report for the 0.5-million TPA plant got prepared by NALCO and is not viable. Hence, they have requested GMDC to drop the project and the same is under approval of the government of Gujarat," the annual report said.

According to sources, about 100 out of the required about 300 hectares of land was already acquired for the purpose. Nalco had also made upfront payment of ₹151 crore for setting up the alumina refinery and smelter plant in Kutch.

"Based on facts and circumstances on the transition date, the same (Kutch plant) was disclosed as non-current non-financial liability. However, subsequently based on detailed project report, both the companies mutually decided not to proceed with the project. The company (GMDC) has initiated the process for repayment of the amount to NALCO without interest, subject to approval of the government of Gujarat," GMDC stated on the page number 95 of the Annual Report under the head of Other Current Financial Liabilities.

Project timeline

About six years ago in 2011, GMDC's board of directors had considered Nalco as a potential partner to form a joint venture for the ambitious alumina project, which was targeted to produce five lakh tonnes of smelter and 10 lakh tonnes of refined alumina per annum.

Later, in 2013, NALCO raised concerns about the extensive power consumption in smelter for converting alumina into aluminium. Nalco had asked GMDC to arrange electricity at a rate of up to ₹2.2 per unit to make the project viable.

Earlier the State government had signed an MoU with Ashapura Minechem, a bauxite miner and exporter but did not execute it, and fresh expression of interests were invited in 2010.

Before NALCO emerged as the sole qualified bidder, companies like Hindalco, JSW Aluminium and Adani Group were among those in the fray for the JV partnership with GMDC. The move was aimed at utilising the natural resource available in the State after the government restricted the export of plant-grade bauxite outside Gujarat from 2010.

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