Nalco in talks with Islamic bank for Rs 10,000-cr Iran project

The company plans to set up a 3.3-lakh tonne aluminium smelter and 800-MW captive power plant in Iran.

Now, the aluminium producer is talking to an Islamic bank in Indonesia for securing a loan for the project, two investment banking sources said.

When contacted, Nalco Director (Finance) B L Bagra said, "A bank from Indonesia has contacted Nalco for funding the Iran project." But, he did not name the bank and refused to elaborate on the quantum of loan which could be sought.

Sources said the company has asked the Islamic bank to send its proposals and terms and conditions for granting the loan. The company is studying the proposal at the moment and would revert to the bank soon, they added.

For the Rs 6,000-crore Phase-I of the Iran project, it is learnt that Nalco is looking to raise about Rs 5,000 crore and rest would be funded through the company's internal accruals.

The navratna firm is keen on reviving the Iran project, and has said there is no problem in securing raw material to run the proposed plants there.

"Gas is available in the country to run the captive power plant. We have enough bauxite at home to export to Iran. Funding is the only problem for the project," Bagra had said.

The company was facing problems in securing finances for its Iran project in view of sanctions imposed on the country by the European Union and the US.

"Due to the US and the EU sanctions on Iran, no bank is coming forward to fund the project," a mining ministry source said.

The leading domestic aluminium producer, is at present working on an estimated Rs 17,000-crore project to set up 5- lakh tonne aluminium smelter in Indonesia along with a 1,250MW captive power plant. The company had recently dropped a similar plan in South Africa citing insufficient reserves of coal that were offered for the project.

The company is now banking on revival of the Iran project. Nalco plans to export bauxite from India to run the proposed smelters.

At present, the aluminium maker produces 1.6 MT alumina from its refineries in Orissa. It produced 3.6 lakh tonne aluminium during the past fiscal. Nalco has abundant bauxite reserves in the country.