Photo: Sandeep Saxena

FOR EXPANSION: Union Mines Minister Sis Ram Ola (right) with Minister of State T. Subbarami Reddy at a press conference in New Delhi on Tuesday.

NEW DELHI: The Union Mines Ministry is ready to disinvest an equity stake of 10 per cent in the state-owned National Aluminium Company Ltd. (NALCO) provided the divestment proceeds are ploughed back into the company for its expansion.

Briefing newspersons here on Tuesday on the Ministry's achievements in 2005-06, Mines Minister Sis Ram Ola said: "We are against disinvestment of profit-making PSUs [public sector undertakings] under the Mines Ministry and NALCO has been doing reasonably well. However, we have agreed to the Finance Ministry's proposal to offload 10 per cent stake in the PSU, but money accrued from the disinvestment should be re-invested in NALCO."

Minister of State for Mines T. Subbarami Reddy was also present at the briefing.

To ensure maximum participation of retail investors in the NALCO public offer, the Finance Ministry, in a note to the Cabinet Committee on Economic Affairs (CCEA), has said: "In view of the high market price of the share of NALCO, it would be necessary to consider splitting of the shares in order to provide affordability to small investors and to allot shares to a large number of investors."

A dilution of 10 per cent of the Centre's holding in NALCO to bring down its stake to 77.15 per cent will mean a public offer of over Rs. 6.44-crore equity shares of the company. At current prices on the bourses, the disinvestment is likely to fetch up to Rs 1,400 crore.

Asked what would behis Ministry's view if the Centre chose to place the disinvestment proceeds in the National Investment Fund, Mr. Ola said, "We are not above the Government."

Second phase

The NALCO expansion programme is currently in its second phase at a total estimated cost of Rs. 4,091.50 crore. Of this, Rs. 1,323.3 crore has been spent.

The entire expansion programme would be completed by 2008, Mr. Ola said.

On the achievements in the mining sector during the year, Mr. Ola said that while Hindustan Copper Limited, another PSU, had posted a net profit of Rs. 112.52 crore, the Mineral Exploration Corporation Limited achieved a gross revenue of Rs. 81.40 crore with a net profit of Rs. 5.65 crore, the highest in the last two decades.

The total value of mineral production during 2005-06 was estimated by the Indian Bureau of Mines at Rs. 75,121.61 crore as compared to Rs. 74,941.70 crore in the previous year, he said.

Mr. Reddy told The Hindu that the mining sector played an important role in the economy. The economies of countries such as Australia, Canada, South Africa and Belgium were virtually dependent on the mining sector.

India, too, was one of the few countries having maximum mineral wealth. Mr. Reddy said, "People will be surprised to know that India's mineral wealth is spread across an area of 18.5 lakh square kilometres. But we are able to explore our wealth in an area of only one lakh square kilometres. As per estimates by the Geological Survey of India, the country has unexploited gold reserves worth Rs. 6 lakh crore."

The Ministry of Mines, therefore, was committed to expanding mining activity throughout the country by procuring global technology and helping Indian entrepreneurs to forge joint ventures with foreign partners, Mr. Reddy said.

To facilitate this, Mr. Reddy said, Prime Minister Manmohan Singh had appointed a high-power committee, under the chairmanship of Anwarul Huda, Member, Planning Commission, to modify the Mineral Act and usher in a new policy to attract the world's latest technology and entrepreneurs.

"Currently, the mining sector production is estimated at Rs. 20,000 crore, which is 0.53 per cent of the Gross Domestic Product. With the new policy luring fresh investments, we aim to achieve about seven times the current production value at 3.5 per cent of the GDP within five to 10 years," Mr. Reddy said.

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