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Nalco taps private firms for fly ash cement project

Import cost from Pakistan turns unattractive MV Ramsurya & Sangita Mehta

MUMBAI : Cement is fast becoming an attractive business option. First it was Vedanta Resources and now state- owned Nalco took a step in this direction exploring options for a cement company. Bhubaneshwar-based Nalco, Asia’s largest alumina company, recently met eight cement players to discuss ways of utilising its fly ash, a byproduct of thermal power generation. Fly ash, which is recovered from gases created by coal-fired power plants, is a cheaper replacement for portland cement that is used in concrete.

Last month, the $7-billion Vedanta had invited bids from interested cement companies to use its fly ash in setting up a cement plant, preferably through a joint venture.

Nalco generates 5,000 tonnes of fly ash a day at its captive power plant at Angul and has been looking at options to dispose this. “We’ve had a preliminary meeting with cement companies and have asked them to come back with detailed financial projections,” Nalco finance director BL Bagra told ET. “Our primary aim is to dispose off the fly ash generated daily,”he added.

The cement companies that have shown interest include Grasim Industries, ACC, India Cements, Shree Cements, Binani Cement and a UK-based fly ash exporter Dirk.

The companies have submitted different proposals for the proposed cement plant. Some companies have asked for Nalco’s land, while some have suggested that the metal company chip in some equity in a joint venture. “We’ll go with the proposal that asks for least contribution from Nalco,” said Mr Bagra, who said that a concrete plan could be ready by the end of September.

The companies intend to build a 2 million cement tonne plant using the fly ash that Nalco generates. A cement plant of this size would cost at least Rs 800 crore.

The UK-based Dirk, one of the largest players in this technology, has already built a pozzocrete plant using fly ash at Nashik in Maharashtra.

The move to utilise fly ash may also have been backed by government efforts to control pollution as fly ash is harmful to the environment. Both Vedanta and Nalco have their operations in Orissa where a number of metal projects have been announced. The Aditya Birla group and Vedanta are in the process of setting up an alumina plant which is opposed by the local population on the grounds that it would harm the ecological balance.

A cement plant in Orissa would give the players access to the fast growing eastern cement market. Tight supply conditions and a strong demand scenario has kept cement prices strong in this region.