NEW DELHI: State-owned maker will send a team of officials to Iran, and Oman as early as next month to explore opportunities for setting up a gas-based thermal power plant and an aluminium smelter.

Previously, the over $2-billion project was slated to come up at one of the specially designated economic zones in Iran’s Kerman province, but could not materialise due to sanctions on the Persian Gulf nation, a source said.

“Now as the sanctions have gone, Nalco will send a team to to explore options for setting up the project by next month or March. They will also visit Oman and Qatar. Since we can get really cheap power in these countries, this will help bring down production cost,” he added.

It takes around $1,500-1,700 to produce one tonne of aluminium metal, with alumina and power each accounting for 40 per cent of costs and other raw materials the remaining 20 per cent.

The source said Nalco can transport alumina from either its refinery in Odisha or its proposed unit which is expected to come up in Kutch (Gujarat).

It’s in discussions with the Gujarat Mineral Development Corporation ( ) to set up a 0.5-million tonne per annum (mtpa) alumina refinery in the state based on supply of bauxite from GMDC’s mines.

The detailed project report has been prepared and is also getting revisited based on bauxite availability, which has not been committed as of now.

Confirming the development, a senior government official said the project is important as it will help Nalco stay competitive and counter cheap aluminium imports from China and the Middle-East, which have severely impacted sales and profits of domestic firms.

When contacted, Nalco CMD T K Chand declined to comment.

He, however, told PTI: “Right now, Nalco is a low-cost alumina producer and to compete in global markets, there is a need to leverage low-cost power available in the Middle-East. This will help produce alumina at a competitive cost and tackle China, the world’s biggest aluminium producer.”

The PSU faces a daunting challenge of keeping operational and raw material costs in check to stay competitive even as it looks to expand capacity to take advantage of a likely infrastructure boom in India.

Demand from the power sector is on the rise as the government sharpens its investment focus on power transmission. Also, an expected demand spurt from transport, building and construction sectors would further increase consumption for the metal.

Construction of smart cities and more consumption for products such as beverage cans, alloy wheels, automobile bodies and railway coaches could also act as catalysts.

Nalco expects India to double its aluminium consumption to 5 million tonnes in the next four years.