India's Nalco to sign agreement with Indonesian govt

JAKARTA, Dec 8 (Reuters) - India's state-run National Aluminium Co Ltd (NALU.BO) plans to sign a Memorandum of Understanding in January with the Indonesian government to build a smelter on Sumatra island, a senior official at the Industry Ministry said late on Friday.

For the initial phase, the company plans to build an aluminium smelter in South Sumatra province with a capacity of 250,000 tonnes a year, said I Putu Suryawirawan, director of metal industry at the Industry Ministry.

The smelter's capacity will be doubled to 500,000 tonnes a year which will need a total investment of $3 billion, he added.

"After signing the MoU, Nalco will conduct a feasibility study on the project," said Suryawirawan.

He added alumina, raw material for the smelter, will be supplied by Nalco's parent company in India.

Nalco's project would be another fresh investment in aluminium processing in the country.

Besides the aluminium smelter, Nalco plans to build a coal-fired power plant which can generate a total of 750 megawatts of electricity from the plant's 3 units.

The power plant will need coal supplies of 4.5 million tonnes per year, Suryawirawan said.

Nalco owns bauxite mine with annual production of 4.8 million tonnes per year and alumina processing with output of 1.575 million tonnes per year.

The company also owns an aluminium smelter, producing 345,000 tonnes of aluminium. (Reporting by Yayat Supriatna, writing by Fitri Wulandari; editing by Sugita Katyal)