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Hindalco in high-stakes bid

Calcutta, Oct. 16: Hindalco has bid for a massive north Australian bauxite project whose scope extends to mining and downstream processing to make aluminium. Investments in the venture run into billions of dollars.

The Aurukun Bauxite Project, with a reserve of 439 million tonnes, has also drawn bids from global giants like BHP Billiton, Chalco of China, Rio Doce Australia (CVRD), Mitsubishi, Hydro Aluminium, Alcoa, SUAL, Alcan and InterTech Systems.

A Hindalco spokesperson declined to comment on the development. If the company trumps others in the fray, it would be a big boost for the A. V. Birla group, whose aluminium operations have been limited to home. The investment could well be the largest by an Indian firm, dwarfing ONGC’s $1.7-billion infusion in Sakhalin.

International bids for the Aurukun project in Western Cape York opened on September 14 and closed last week. Bidders have until February 1 to submit provisional proposals, based on which they will be short-listed.

The final bids are due by May 31, and the preferred developer will be named by July. The estimated reserves of more than 650 million tonnes of bauxite in Cape York, in northern Queensland, will be one of the largest in the world. The composite development programme ' including mining and refining ' will also be one of the largest ever.

Moving away from the tradition of allowing mining companies a free run on ore exports, authorities in Queensland are insisting that firms carry out refining there. This will create more jobs and foster economic development.

A similar policy is being pursued back home by many state governments, which insist that value-addition be carried out by companies within their borders.

Hindalco, one of the largest producers of aluminium in Asia and one of the most cost-efficient globally, has a presence in Australia, where it acquired two copper mines.

The company has refining capacity of 1,14,5000 tonnes per annum; it can produce 4,24,000 tonnes of metal. The Rs 10,000 crore company has announced major expansion programme to ramp up its output levels.

The non-ferrous metal giant will invest Rs 12,000 crore in expanding its existing alumina and aluminium units and in setting up new facilities. Money needed for the plan will come from a rights issue that was made recently.

The investment will be channelled into the brownfield expansion of its alumina facilities at Muri (Jharkhand) from 1.1 lakh tonnes to 4.5 lakh tonnes. At Belgaum (Karnataka), it will go up from 3.5 lakh tonnes to 6.5 lakh tonnes.

The capacity at the existing facility at Hirakud (Orissa) will be jacked up from 65,000 tonnes to 1.46 lakh tonnes. Captive power units are also part of the larger plan.

Hindaco is also investing in Aditya Aluminium, a fully integrated greenfield aluminium complex in Orissa. It can manufacture one million tonnes of alumina and 2.8 lakh tonnes of aluminium. The company is picking up a 55 per cent stake in Utkal Alumina International. The project, a joint venture with Alcan, envisages a 1-1.5-million-tonne alumina plant.

The company reported a 38 per cent growth in net profit at Rs 324.90 crore for the first quarter ended June 30.

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