``Disinvestment in Nalco could take place in the next fiscal,'' B. B. Tandon, secretary in the Union ministry of mines, told delegates at the conference accompanying the fifth International Mining and Machinery Exhibition on Tuesday. A 30 per cent divestment in Nalco had been recommended by the Disinvestment Commission.

Tandon said that the Centre had now accepted the recommendation. The government holding in Asia's largest integrated aluminium producer, is at present 87.15 per cent, 12.85 per cent of the Centre's stake having been offloaded already to financial institutions, mutual funds and small investors.

The mines secretary pointed out that the 43 per cent divestment of the Centre's shareholding in Nalco notwithstanding, the company wouldremain a ``core sector'' public sector enterprise (PSE). The public offering would be preceded by a capital restructuring, involving conversion of half the company's equity capital into long-term debt.

The capital restructuring proposal is now awaiting a nod from the Union ministry of finance. ``Besides creating the right environment for attracting private sector investment'' in mining and mineral-based industries, Tandon said (referring to the spate of amendments of mining laws since 1993,) ``the government has also taken the initiative to privatise and divest its holdings in existing public sector units (PSUs) in the mining and mineral sector.''

The Bharat Aluminium Company (Balco), another integrated aluminium producer in the PSU stable, is being privatised by offloading government equity to a strategic partner in phases. A global advisor has already been selected to advice on the disinvestment.

A capital restructuring of Balco is also being actively considered, before the Centre offers 40 per centof its stake to a strategic partner. Tandon said the government holding in Balco would come down to 26 per cent two years after the first phase of divestment and finally to nil.

The Centre is still pondering on the Disinvestment Commission's recommendations on Hindustan Zinc Limited and Hindustan Copper Limited. In the previous tranches of disinvestment, the government had offloaded 27 per cent equity in Hindustan Copper and 25 per cent of its stake in Hindustan Zinc.

The Disinvestment Commission has suggested that the government offer another 25 per cent of its stake in Hindustan Zinc to a strategic partner. The mines ministry is still looking at the proposal.

Tandon said Hindustan Copper would in the long run be ``hived off to the private sector through the strategic partner route.'' He did not divulge which of the two options proposed by the Disinvestment Commission, had been accepted by the Centre, though.

The commission has proposed that the Centre restructure and expand Hindustan Copper's miningoperations before divesting 51 per cent of its shareholding in the company, through a strategic sale. The remaining 22 per cent of the government stake could then be offered to domestic institutions, small investors and employees.

An alternative proposal is to sell 51 per cent of the government holding to a strategic partner first and restructure the company's mining operations before the second tranche of disinvestment. According to the seventh report of the Disinvestment Commission, a government decision on the recommendations was still awaited.

``As you can well imagine,'' Tandon said, ``such a transformation from the socialistic model to a competitive scenario is not easy,'' referring to the teething troubles of mining PSUs now compelled to adjust to market-driven prices.

Susan Shabangu, South African deputy minister of minerals and energy, who is leading a large delegation of mining companies to the fair, narrated the South African experience with market reforms. Mining in South Africa iscontrolled by the private sector, the ranks of which include global giants like De Beers.

The conference was also attended by Jorg Bickenback, vice-minister of economics, technology and transport of the German state of Nordrhein-Westfalen, who heads a delegation of mining equipment manufacturers from his country. Beverly Webster, president of the British Mining Equipment Companies, leads delegates from the UK, which happens to be the partner country at the fair.