National Aluminium Company Limited (NALCO) National Aluminium Company Ltd.

(NALCO) was set up to exploit Bauxite reserves at Panchpatmali mines in the state of Odisha for production of Alumina and Aluminium. The Government's decision to set up NALCO was a turning point in the history of Indian Aluminium Industry. It paved the way for the country to be self sufficient in aluminium metal and also brought a technological edge in producing this strategic metal as per the world standards. Incorporated in 1981 as a Public Sector Enterprise, NALCO is a Schedule-A Central Public Sector Enterprise (CPSE) under the administrative control of Ministry of Mines with 87.15% sharholding by the Government of India. With consistent track record in capacity utilization, technology absorption, quality assurance, export performance and profitability, NALCO is a bright example of India's industrial capability. The Company is an integrated and diversified mining, metal and power producer with annual sales of `5,311 crore in FY2009-10. The manufacturing units of the Company are located at Damanjodi and Angul in the state of Odisha. It has bulk shipment facilities at Visakhapatnam port in Andhra Pradesh. Earnings from alumina and aluminium export account for approximately 40% of its turnover. Presently the Company has business dealings with more than 30 countries in the world. NALCO is the first Company in India in the aluminium sector to be registered with LME in May 1989. The Company's equity shares are listed in Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). The Company has to its credit ISO 9001:2000 quality certification, ISO 14001 and OHSAS 18001 environment management certifications. The Company has also adopted SA 8000 international standards for Corporate Social Accountability. NALCO enjoys the status of a Premier Trading House and has been conferred 'Navratna' status by the Government of India. The main highlights of the major production units of the Company are given below: Bauxite Mine NALCO's bauxite mine, spread over 18 kms., is located at Panchpatmali hills in Koraput District of Odisha. The original mining capacity of 4.8 million tonnes per year(MTPY) is being upgraded to 6.3 MTPY under the 2nd phase expansion, which will be further upgraded to 6.8 MTPY under the upgradation project of mines & refinery. Approximately 90% of the bauxite from the mine represents Gibbsitic Alumina, also called Tri-hydrate Alumina, a property which allows it to be digested at a relatively low temperature and at atmospheric pressure during the alumina refining process. Alumina Refinery Alumina refinery plant of the Company is situated at Damanjodi in Koraput District of Odisha. The plant is located about 14 kms. from the Panchpatmali bauxite mines. The mined bauxite is transported to refinery plant by a 14.6 km long single flight multi curve 1,800 tonnes per hour (TPH) capacity cable belt conveyor, unique of its kind in India. Bauxite is processed and refined and alumina is produced and transported to aluminum smelter plant at Angul as well as to the storage and handling facilities at Visakhapatnam port by specially designed rail wagons. The present capacity of alumina refinery is 1.575 MTPY consisting of three production lines of each of 525,000 metric TPY. The capacity is being augmented to 2.1 MTPY under 2nd phase expansion with addition of one more stream and it will be further enhanced to 2.275 MTPY under the upgradation project of mines & refinery. The produced alumina is transported to Angul to cater to the requirements of the smelter plant for production of primary aluminium metal, alumina that remains surplus after internal consumption at smelter plant is sold to third parties primarily in the export markets. The unique features of NALCO's alumina refinery are cent per cent capacity utilization, use of temperature atmospheric digestion technology, production of sandy calcined alumina and co-generation of power for its captive use. The process technology was provided by Aluminium Pechiney (now Rio Tinto Alcan). Aluminum Smelter The Company's aluminum smelter plant is situated at Angul in Odisha. The smelter plant is about 699 kms. from the alumina refinery plant, 5 kms. from the captive power plant, 564 kms. from Visakhapatnam port facilities, 194 kms. from the Paradeep port and 551 kms. from the Kolkata port. The aluminum metal produced at aluminum smelter plant is transported to Visakhapatnam port and also to Paradeep port by rail for domestic sale as well as for export. The production capacity of 3,45,000 TPY has been further increased to 4,60,000 TPY under the 2nd Phase Expansion of the Company.

The smelting process is carried on by using electrolytic reduction for conversion of alumina into primary aluminium metal. From the pot-line, the molten aluminum is routed either to casting units, where the aluminum is cast into ingots, sow ingots, billets, wire rods, cast strips and alloy ingots, or to holding furnaces at flat aluminum products unit where the molten aluminum is rolled into various cold-rolled products or cast into aluminum strips. The aluminum smelter operates on one of the modern electrolysis technology, namely the AP-18 provided by Aluminum Pechiney (now Rio Tinto Alcan), which is being upgraded from time to time. Captive Power Plant The coal based captive power plant of the Company is strategically located about 5 kms. away from the aluminium smelter plant at Angul to have access to low cost electric power and to minimize transmission losses of power. The location of captive power plant at Angul was strategically planned at the proximity of Talcher coalfields. NALCO sources major coal requirements for its captive power plant from Talcher coalfields through 18.5 kms. captive railway system enabling transport of critical and bulk requirement of coal at relatively low cost. The captive power plant has an electric power generation capacity of 1200 MW by way of ten turbo-generators, each rated at 120 MW. The captive power plant meets the entire electric power requirement of aluminum smelter plant. It also provides approximately 35% of the electricity power requirement of alumina refinery plant besides supplying the surplus power to State grid. Export/Import Performance Under the Foreign Trade Policy 2009-10, NALCO has been granted with 'Premier Trading House Status' for achievement in export target. Certificate of recognition as Premier Trading House has been issued on 30.9.2009 which is valid upto 31.3.2014. Premier Trading House status is the highest status awarded to any Export House by Government of India. NALCO has achieved export earnings of `2,209 crore in the year 2009-10 and `1,287 crore during the year 2010-11 upto November, 2010. Physical performance and sales performance during the year 2010-11 are shown at Table 10.1 and Table 10.2. Table 10.1 Physical Performance of NALCO
Product Unit 2008-09 2009-10 Target for 2010-11 49,80,000 16,45,000 4,35,000 7,515 Actual upto Nov, 2010 30,48,984 10,42,600 2,90,765 4,925 2010-11 Estimated Dec, 2010 to Mar, 2011 18,31,016 5,17,400 1,45,235 2,500

Bauxite Alumina Aluminium Net power

MT MT MT MU

47,00,027 15,76,500 3,61,262 5,541

48,78,888 15,91,500 4,31,488 6,293

MT- Metric Tonnes / MU- Million Units

Table 10.2 Sales Performance of NALCO

Aluminium Export Domestic Aluminium Sale Total Aluminium Sale

MT MT MT

82,314 271,274 353,591

146,948 289,031 435979

Total Alumina/ Hydrate Sale On-Going Projects Utkal-E Coal Block

MU

889,523744,048720,000423,127296,873

NALCO was allocated "UTKAL-E" coal block for its 9th, 10th, 11th & 12th units of its captive power plant on 27.8.2004 by Department of Coal, Ministry of Coal & Mines, Government of India. The Board of the Company has approved the DFR and accorded investment approval for Utkal-E coal mine project with coal and OB outsourcing variant at a capital cost of `214.89 crore (at October 2006 price level), which has been

revised to `280.30 crore at November, 2009 price level. Mining lease application of Utkal-E Coal block after due scrutiny and recommendation by the Government of Odisha was forwarded to Ministry of Coal, Government of India during January, 2010 and the same is under process. The process of acquisition of land is on. Utkal-E Coal Block project is scheduled to be commissioned by 30.06.2012. UP-GRADATION OF 4TH STREAM OF REFINERY NALCO has undertaken upgradation of 4th stream of alumina refinery. The project to upgrade total capacity from 2.1 MTPY to 2.275 MTPY is likely to be completed by March, 2012. UPGRADATION OF SMELTER POTLINE FROM 180KA TO 220KA NALCO has embarked upon a plan to enhance the amperage in the pot lines from 180 KA to 220 KA at an estimated investment of `1,500 crore for both aluminium smelter and captive power plant. On completion of the project, the metal production will increase by about 1,00,000 MT per annum. The project is scheduled to be completed by 2017. Expansion and Diversification Status of 2nd Phase ExpansionProject The Government of India accorded approval for 2nd phase expansion of mines, alumina refinery, aluminium smelter and captive power plant of NALCO on 26.10.2004 at an outlay of `4091.51 crore (at July, 2003 price level) with a completion period of 50 months from date of approval. The project cost has been revised to `4402 crore at November, 2008 price level by NALCO's Board. The project is scheduled to be completed by 31.03.2011. The 2nd phase expansion and diversification status is given at Table 10.3 and Table 10.4. Table 10.3 2nd phase Expansion and Diversification status
UNIT EXISTING ADDITION IN 2ND PHASE EXPANSION 1.5MTPY 0.525MTPY 1,15,000TPY 2x120MW CAPACITY AFTER EXPANSION 6.3MTPY 2.1MTPY 4,60,000TPY 10x120MW

Bauxite Mines Alumina Refinery Aluminium Smelter Captive Power Plant MTPY- Million tonnes per year,

4.8MTPY 1.575MTPY 3,45,000TPY 8x120MW TPY- Tonnes per year, MW- Mega watt

Table 10.4
Sl. No. 1. 2. Project Segment Mines & Alumina Refinery Aluminium Smelter Cumulative Progress till Nov, 2010 (in %) 96.9 99.54 Remarks Expected commissioning by March, 2011 All 240 pots commissioned

3.

Captive Power Plant

98.98

Unit #IX: Commissioned in Aug, 2009

Corporate Plan & Business Development 10.19 The new Corporate Plan and Vision 2020 were adopted by the Company in 2009-10. The new Vision Statement of the Company is: " To be a Reputed Global Company in the Metals and Energy Sectors" New Mission statement adopted by the Company is: to achieve sustainable growth in business through diversification, innovation and global competitive edge. to continuously develop human resources, create safe working conditions, improve productivity and quality, and reduce cost and waste. to satisfy the customers and shareholders, employees, and all other stakeholders. to be a good corporate citizen, protecting and enhancing the environment as well as discharging social responsibility in order to ensure sustainable growth. to intensify R&D for Technology development.

10.20 The major thrust will be diversification and capacity addition. The major goals identified by the Company are: to achieve annual turnover of over 25,000 crore by 2020. to achieve annual production of 1.7 million tonnes aluminum and 4 million tonnes alumina by 2020. to transform from being only an "aluminum producer" to become a metal producer and energy provider. to venture into new fields of activity beyond aluminum by setting up at least two diversified projects by 2016. to target at least one 1000 MW IPP by 2016. to maximize value and long term return to share holders through a strategy of new investments, cost competitive mines and business driven by the quality of products and services. to develop long-term relations with domestic and foreign clients and Joint Venture partners. to develop a powerful scientific and technical base. Apart from investments in volume growth, the company shall substantially finance R&D and modernization of facilities, laboratories, achieving improvements in the quality of products and satisfying customer demands. to adopt main strategic priorities aimed at end user orientation.

NALCO has signed Memorandum of Understanding(MoU) with Nuclear Power Corporation of India Ltd. (NPCIL) for establishment of a nuclear power plant in Joint Venture(JV) mode in Gujrat. The Company has also signed an MoU with Orissa Industrial Infrastructure Development Corporation (IDCO) to set up an aluminium park at Angul in JV at an estimated cost of 75 crore. The newly incorporated JV Company named 'Angul Aluminium Park Ltd.' will set up an aluminium downstream and ancillary complex at an area of 200 acres of land adjacent to aluminium smelter. While IDCO will hold 50.5% stake in the new company, the rest 49.5% shares will be held by NALCO. The aluminium park will house units for manufacture of aluminium conductors, aluminium casting, extrusion, slugs and circles, CP coke, CT pitch, aluminium fluoride, etc. NALCO is also exploring various opportunities for securing mineral assets abroad. In this connection, discussions are on with various overseas firms. Computerisation Like all progressive organisations, NALCO from its inception has taken the approach of leveraging on information and communication technology (ICT) to strengthen and boost its business processes, so as to deliver its strategic business objectives to increase sales, maximise operational efficiency, reduce operational risks and improve productivity. The ERP project N'vision for implementing SAP started from July 2008, and by now all the modules have gone live. It covers materials & contracts (MC), sales & distribution (SD), production planning (PP), quality, finance (FICO) and human resource management (HR) modules. Additional modules of SAP such as supplier relationship management (SRM), advanced planning & optimization (APO), document management system (DMS). Business intelligence (BI) will be shortly implemented and employee self service (ESS) is planned in the future. The comprehensive project comprising SAP ERP, IBM hardware with CA unicentre EMS , data centre with honeywell BMS and SAP implementation services cost about 16 crore. In the area of e-governance, e-tendering applications have matured, with regular tenders for investment of surplus funds. Similarly, e-tendering for export sales has been implemented with security measures like server secure socket layer (SSSL) certificate and end user PKI digital certificate. With the go-live of SAP application, additional processes like Materials procurement, Service tenders, and Recruitment processes shall follow the e-way. Research and Development Activities The Company is planning to set up a state of art NALCO Research & Technology Centre (NRTC) at Bhubaneswar at an estimated outlay of 88 crore in the 1st phase. The Vision and Mission of NRTC is given below: Vision "To set up world class, state of the art research and development facilities to enable NALCO to achieve excellence and sustainability in process, product and technology in the field of Bauxites, Alumina, Aluminum, Power and allied areas including downstream products." Mission

"To develop and strengthen technology expertise pertaining to Bauxite, Alumina and Aluminium in the next five years, which will enable NALCO to be self sustained in the field of Bauxite mining, Alumina Refining and Aluminium Smelting technology." A road map for implementation of NRTC with the details of R&D projects that are to be planned in the NRTC is being finalized with the help of an Adhoc Committee consisting of experts from outside and the technical consultant.