GACL-NALCO Delays Commissioning of its 266 KTPA Caustic Soda Plant

As revealed by a company source earlier this week, GACL-NALCO Alkalies & Chemicals Ltd (GNAL) has postponed the scheduled commercial operations date (SCOD) of its greenfield 266 KTPA (kilo tonnes per annum) Caustic Soda plant in Dahej to August 2021 from the earlier estimated April 2021.

As per the company officials, limited labor availability, restrictions related to work timings and social distancing norms due to the outbreak of Covid-19 have significantly delayed the progress of the project.

In addition, the parent company, GACL has also revised the project cost to INR 23 billion from the initial estimated cost of INR 20 billion. As of November 30, 2020, GNAL had already incurred total project cost of INR 14.4 million and overall progress of the project stood at around 80% as of December 14, 2020, with nearly 2000 workers involved on the site. The increased project cost was also on account of higher than anticipated cash flows towards Goods and Services tax (GST).

As per industry sources, the new plant at Dahej is like a capacity expansion drive for GACL while for NALCO it is an effort to maintain cost competitiveness since Caustic Soda is the key raw material for manufacturing alumina. Of the total plant capacity, Caustic offtakes by NALCO would comprise nearly 20% of the total produce while the remaining stock would be held by GACL for further reselling in the market. Currently, GACL’s total installed capacity of Caustic Soda is around 429 KTPA with its production units located in Vadodara and Dahej in Gujarat.

GNAL is a joint venture between the state-owned chlor-alkali giant, Gujarat Alkalies & Chemicals Ltd. (GACL) and central public sector undertaking (PSU) National Aluminium Co Ltd (NALCO). While GACL is amongst the top three players involved in manufacturing of Caustic Soda and other chlor-alkali derivatives in the country, NALCO is one of the largest integrated producers of bauxite-alumina-aluminum-power in India and one of the leading low-cost producers of metallurgical grade alumina in the world. Leading technology provider, ThyssenKrupp Industrial Solutions India Pvt Ltd (TKIS) would provide facilities related to the Engineering, Procurement, Construction & Management services (EPCM) of the project.

As per ChemAnalyst, there has been considerable softening in the domestic Caustic Soda rates in Q3 and Q4 FY21, due to moderate demand coupled with surge in cheap imports from countries like China, Turkey, US etc.

Plant efficiencies have also declined sharply during H2 FY21 to balance out the demand-supply scenario in the chlor-alkali industry. Since power cost holds more than 40% share in the overall production cost, the profitability of players is also susceptible to fluctuations in the energy. The commissioning of GNAL’s green-field project at this time would require thorough risk analysis though the company is anticipated to tie-up with other downstream industries in future, taking advantage of its sound market position.