Wednesday, 01 Sep 2010
ET reported that National Aluminium Company has started the process to extend its metals business by looking for prime buyout targets in copper, uranium and coal in Africa and Afghanistan in a strategy aimed at insulating the company from price fluctuations in aluminum.

A senior company executive said that NALCO which has witnessed stiff employee opposition to any efforts to sell government stake will also search for assets overseas that can convert its surplus alumina into aluminum metal. Electricity accounts for almost three fourths of the total cost in an aluminum smelter.

Nalco has invited bids from advisors and is currently shortlisting names from a host of consultants including Ernst & Young, PricewaterhouseCoopers, Deloitte, SBI Caps, Kotak Mahindra Capital.

Mr BL Bagra finance director of NALCO said that close to a dozen-odd consultants have shown interest so far. Other consultants such as Royal Bank of Scotland and UBS have also bid for the job.

Rising global demand for mineral assets has pushed up the valuations of such assets prompting suitors to rope in specialist advisers to spot feasible targets at realistic prices. A recent mining report by PricewaterhouseCoopers says that companies were intent on conserving cash resources and reducing costs during 2009 which made the cash pile rise 32% or about USD 18 billion.

The disinvestment ministry had recently proposed to the mines ministry to consider selling 10% of the government’s 87.2% holding in NALCO. The plan is estimated to raise around INR 2,000 crore. The move has invited criticism from the BJD ruled government in the state which said that the government was exploiting a profitable company.