Calcutta, March 20: National Aluminium Company Limited (Nalco) is eyeing a cost advantage as it plans to venture overseas by setting up a 0.5-million-tonne smelter unit.

The public sector aluminium maker has zeroed in on three locations in West Asia, with Iran leading the list.

Low power and infrastructure costs are among the key considerations of the Bhubaneswar-based company, which has worked out a cost-management strategy to sustain profitability in the aluminium market that is getting influenced by a surplus production in China.

"Three things push up the production cost of aluminium in India - energy, labour and freight. We want to take these three advantages in the international markets. So, we are searching for a place where we can manage costs, and in West Asia these benefits are available. We are now weighing among Iran, Oman and Qatar, with Iran being a frontrunner," Tapan Kumar Chand, chairman and managing director of Nalco, told The Telegraph.

The amount of investment will depend on the power arrangement for the unit.

"If we can get direct power, with long-term agreement, then we will only go for the smelter unit. If we go only for the smelter unit, the cost can be around Rs 12,000-13,000 crore. But if we have to go for a power plant, the cost will be more," Chand said.

"We are planning to send a team in May," he said, adding that the final decision could be taken in the next two to three months.

In India, Nalco is expanding its alumina refinery unit at Damanjodi by setting up an additional capacity of 1 million tonne per annum.

This will increase the refinery's capacity to 3.275 million tonnes per annum.

The company had announced its investment plan of Rs 20,550 crore, which includes refinery expansion and the setting up of an aluminium park at Angul.

"This brownfield expansion has become possible because of the coal block allocation (Utkal coal blocks). The state government has given the Pottangi mines (bauxite) and they expect some value addition in Odisha. Now on the raw material front, Nalco is secure," Chand said.

The company is also setting up a 2.7-lakh-per-annum caustic soda plant in Gujarat. "I hope that within 24 months the entire project will be completed," Chand said.

Nalco produced 57.39 lakh tonnes of bauxite, 18.51 lakh tonnes of alumina hydrate and 3.27 lakh tonnes of aluminium in 2014-15.

The company is expecting to end 2015-16 with a 10 per cent growth in the production of bauxite and alumina hydrate, while the growth in metal production could be 10-15 per cent.

"Next year (2016-17), we are aiming for a 12 per cent growth in bauxite and hydrate," Chand said.

Nalco's scrip on Friday closed 0.13 per cent higher at Rs 39.90 on the Bombay Stock Exchange.