Business | General
RMMI acquires 24% of smelter venture
RAK Minerals and Metals Investments (RMMI) yesterday said it intends to purchase a 24 per cent equity stake in National Aluminum Company's (Nalco) new aluminium smelter in Indonesia.
- Staff Report
- Published: 23:51 December 21, 2008
Dubai: RAK Minerals and Metals Investments (RMMI) yesterday said it intends to purchase a 24 per cent equity stake in National Aluminum Company's (Nalco) new aluminium smelter in Indonesia.
Following Nalco's agreement with the Government of Indonesia to set up an aluminium smelter, Nalco signed a Memorandum of Understanding with RMMI on December 19.
Through this memorandum, Nalco will leverage on RMMI's existing coal mine operations and infrastructures, to provide the coal energy for the plant and manage the logistics needed for the operations of the proposed aluminium smelter.
Under the MoU, RMMI will provide 5 million tonnes annually of low sulphur thermal coal to manage the energy needs of the aluminium smelter.
Investment
This equity stake brings the overall investment of the smelter and power plant to $4 billion. While operations of the newly proposed smelter plan to leverage on RMMI's current infrastructure projects, it will actively scout for other viable locations in Indonesia that are deemed to be better suited to facilitate the logistics requirements of the smelter.
"Through this joint venture, RMMI will be able to expand its mining capacity in Indonesia, and increase the much needed supply chain infrastructure surrounding our current operations in South Sumatra. This smelter will also complement the smelting and metal based fabrication industries that have been proposed under our MoU with the Government of South Sumatra," said Madhu Koneru, Managing Director of RMMI.
The MoU, signed with the Government of South Sumatra last February, aims to develop an industrial park with supporting facilities at Tanjung Api-Api in South Sumatra with a twofold objective: supporting mining-to-export chain of coal, and developing local economies surrounding the greenfield coal mines. Further, the building management of the logistics infrastructure will be escalated by the Government of South Sumatra's commitment to providing sufficient land and fast tracking the approval and licensing of the industrial city.
Synergy
"Entry of RMMI into the project would create synergic value for the two companies and enhance the commitment to the project. The smelter would be dependent upon efficient port and rail operations in that the raw materials would be imported and part of metal products exported through these facilities.
"The schedules of construction of port and rail corridor by RMMI on one hand and of smelter and power plant by NALCO on other would be synergised more efficiently through the joint venture," said Bajrang Bagra, Director Finance of Nalco.
The smelter will be managed by PT Nalco International, wholly-owned by Nalco, where Nalco will retain the majority equity stake of 76 per cent, with management control.
Nalco, India's key aluminium producer and a public listed company in which the Government of India holds majority stake, has an estimated turnover of $1.5 billion and 25 years of experience in mining bauxite, refining and aluminium smelting.
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