Navratna PSUs Form 50:50 Joint Venture for 1,080 MW Captive Power Plant; Project to Strengthen Energy Security and Support Long-Term Aluminium Growth

India’s aluminium and power sectors received a major boost as two leading public sector enterprises, National Aluminium Company Limited (NALCO) and NLC India Limited, announced a strategic partnership to develop a 1,080 MW captive thermal power plant in Odisha.

The project, estimated to involve an investment of around ₹12,000 crore, will support Nalco’s upcoming aluminium smelter expansion at Angul by ensuring a stable and cost-effective electricity supply.

The collaboration comes at a crucial time as India continues to focus on strengthening domestic manufacturing, expanding aluminium production capacity and improving energy security for industrial growth.

50:50 Joint Venture to Develop 4x270 MW Power Plant

Nalco and NLC India have signed a joint venture-cum-shareholders’ agreement to establish an equal partnership company for developing the project.

The proposed power plant will consist of:

• Four units of 270 MW each

• Total installed capacity of 1,080 MW

• Location: Nalco’s existing captive power complex at Angul, Odisha

The project will be developed as a brownfield expansion, allowing both companies to utilise existing infrastructure and reduce execution challenges.

By using Nalco’s existing facilities, the companies expect faster implementation and better cost efficiency compared with developing a completely new greenfield project.

Power Requirement Linked to Nalco’s Aluminium Expansion Plan

The new power plant is directly linked to Nalco’s ambitious aluminium capacity expansion programme.

The company is expanding its aluminium smelter capacity at Angul by 0.5 million tonnes per annum (mtpa), with commissioning expected by 2030-31.

Aluminium smelting is among the most electricity-intensive industrial activities, requiring uninterrupted power supply throughout the production process.

The expansion is expected to require an additional 800 MW of dependable captive power, making the new project strategically important for Nalco’s future growth.

Captive Power to Reduce Cost Pressure for Aluminium Production

Power costs represent one of the largest expenses in aluminium manufacturing, accounting for nearly 35-40% of total production costs.

By developing its own captive power facility, Nalco aims to:

• Reduce dependence on external electricity sources

• Protect margins from market power price fluctuations

• Ensure uninterrupted energy availability

• Improve competitiveness in global aluminium markets

Long-term captive power availability could provide greater cost visibility for the company as aluminium demand continues to expand.

25-Year Power Agreement Ensures Long-Term Revenue Visibility

Under the agreement, the joint venture company will enter into a 25-year power purchase agreement (PPA) with Nalco.

The agreement will ensure that:

• 100% of electricity generated from the plant is supplied to Nalco

• The aluminium producer receives reliable power supply

• The joint venture gets predictable revenue visibility

The long-term structure provides stability for both companies and reduces operational uncertainty.

NLC India Brings Mining and Energy Expertise

NLC India’s participation strengthens the project due to its experience in coal mining and power generation.

The company is expected to leverage its coal resources, including supplies from the nearby Machhakata coal mine in Odisha, to support uninterrupted fuel availability.

A long-term fuel supply agreement will help manage one of the biggest challenges in thermal power generation — fuel security.

Coal supply is expected to be linked to notified prices of Coal India Limited, providing transparency and stability in input costs.

Renewable Energy Integration Supports Green Aluminium Goals

While the project is based on thermal power generation, the partnership also includes a renewable energy component.

Nalco plans to procure around 200-250 MW of firm renewable energy to meet regulatory renewable energy consumption requirements.

NLC India will support this initiative through:

• Renewable power purchase agreements

• Group captive renewable energy models

• Access to renewable energy assets

The move aligns with the growing global focus on sustainable aluminium production.

India’s Aluminium Demand Expected to Rise

The aluminium sector is expected to play an important role in India’s industrial growth story.

Demand for aluminium is increasing across multiple sectors, including:

Electric Vehicles

Aluminium is widely used in vehicle manufacturing due to its lightweight properties.

Renewable Energy

Solar projects, transmission networks and energy infrastructure require significant aluminium usage.

Construction and Infrastructure

Urban development and industrial expansion continue to drive metal demand.

Defence and Aerospace

Advanced manufacturing sectors are increasingly using aluminium-based materials.

Strategic Benefits for Nalco and NLC India

Benefits for Nalco

• Secure electricity supply for expansion plans

• Better control over production costs

• Reduced exposure to power market volatility

• Stronger aluminium production capabilities

Benefits for NLC India

• Expansion of power generation portfolio

• Better utilisation of mining resources

• Stable long-term power sales agreement

• Strengthened presence in Odisha’s energy sector

Government Push for Industrial Self-Reliance

The partnership supports India’s broader strategy of improving domestic industrial capacity and reducing dependency on external supply chains.

The agreement was signed in the presence of senior government officials, including Union Coal and Mines Minister G. Kishan Reddy.

The government has been encouraging collaborations among public sector enterprises to create large-scale infrastructure projects supporting manufacturing growth.

Investor Perspective: Long-Term Positive for Metals and Power Themes

The Nalco-NLC India partnership highlights several important investment themes:

• Rising aluminium demand

• Energy security for industries

• Public sector collaboration

• Infrastructure-led growth

• Renewable energy integration

For investors tracking metals, mining and power sectors, such projects indicate long-term capacity expansion and improved operational visibility.

However, investors will continue monitoring execution timelines, capital expenditure progress and commodity market conditions.

Conclusion: Major Infrastructure Step for India’s Aluminium Growth

The ₹12,000 crore captive power project marks an important milestone in Nalco’s expansion journey and India’s broader industrial development plans.

By combining reliable thermal power capacity with renewable energy integration, the project aims to strengthen energy security, improve aluminium production efficiency and support future demand growth.

The partnership between Nalco and NLC India reflects the growing role of strategic PSU collaborations in building India’s next phase of manufacturing and infrastructure growth.