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Nalco eyes profitability from aluminium operations by FY19 end

Firm says once coal mining from two key blocks starts, power cost will fall, profits will improve

Jayajit Dash & Nirmalya Behera  |  Bhubaneswar 

Source: Wikipedia
Source: Wikipedia

National Company (Nalco) hopes to turn in profit from its business towards the end of 2018-19 after the commencement of coal mining from its captive Utkal D coal block.

"With the commencement of coal production from Utkal-D and Utkal-E blocks, the power cost will plunge which will make the business more profitable. We are hopeful that the production from Utkal-D block will start in two years", T K Chand, chairman cum managing director of told Business Standard.

Power cost accounts for 40 per cent of production. Despite being the lowest cost producer of in the world, steep power cost was constraining Nalco's ability to be cost effective in production. Nalco's production cost of the hot metal hovers around $1,450 per tonne. On the contrary, Nalco's private sector rival reported an average production cost of $1,429 per tonne with its Jharsuguda smelter achieving even a lower production cost of $1,388 a tonne. Vedanta, despite the absence of captive lease and lack of captive bauxite sources, had succeeded in containing its making cost on the back of cost optimization measures and availability of power from group company owned power plant in the vicinity of its smelting complex at Jharsuguda.

Coal supplies from its captive block will help cut production cost of metal by Rs 500 per tonne.

is expanding its production through both, and routes. At its existing smelter at Angul which has a nameplate capacity of 0.46 million tonne per annum (mtpa), is adding 0.5 million tonne capacity per annum. The is also going for a new smelting unit at Kamakhyanagar in Dhenkanal district. The smelter with a proposed capacity of 0.6 mtpa is being pursued at an investment of Rs 12,000 crore.

To secure power supplies for the smelter, has entered into a joint venture agreement with Ltd for a coal-fired power project with a capacity of 2,400 Mw with an investment of Rs 14,000 crore. The location chosen for this power plant is Gajmara, some 45 km from Kamakhyanagar, the site of the proposed smelting unit. has agreed to buy 80 per cent of the power from the 2,400 Mw project.

At present, alumina, mainly exports by have been the key driver of its profitability. Last year, raked in export earnings of Rs 2,200 crore through exports. Since making in the country was dearer for due to the steep electricity cost, the company chose to export the surplus Every year, produces about two million tonne of of which nearly the half is exported. But, with opting for more value addition, its focus would be on conserving more and limiting exports. In 2017-18, has aimed to augment output by 12 per cent as prices have firmed up and prices of the metal have touched multi-year highs. prices for the cash buyer were ruling at $1,850 per tonne (as on March 14, 2017).

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Nalco eyes profitability from aluminium operations by FY19 end

Firm says once coal mining from two key blocks starts, power cost will fall, profits will improve

National Aluminium Company (Nalco) hopes to turn in profit from its aluminium business towards the end of 2018-19 after commencement of coal mining from its captive Utkal D coal block."With the starting of coal production from Utkal-D and Utkal-E blocks, the power cost will plunge which will make the aluminium business more profitable. We are hopeful that the production from Utkal-D block will start in two years", T K Chand, chairman cum managing director of Nalco told Business Standard.Power cost accounts for 40 per cent of aluminium production. Despite being the lowest cost producer of alumina in the world, steep power cost was constraining Nalco's ability to be cost effective in aluminium production. Nalco's production cost of the hot metal hovers around $1450 per tonne. On the contrary, Nalco's private sector rival Vedanta reported an average aluminium production cost of $1429 per tonne with its Jharsuguda smelter achieving even a lower production cost of $1388 a tonne. Vedanta, .. National Company (Nalco) hopes to turn in profit from its business towards the end of 2018-19 after the commencement of coal mining from its captive Utkal D coal block.

"With the commencement of coal production from Utkal-D and Utkal-E blocks, the power cost will plunge which will make the business more profitable. We are hopeful that the production from Utkal-D block will start in two years", T K Chand, chairman cum managing director of told Business Standard.

Power cost accounts for 40 per cent of production. Despite being the lowest cost producer of in the world, steep power cost was constraining Nalco's ability to be cost effective in production. Nalco's production cost of the hot metal hovers around $1,450 per tonne. On the contrary, Nalco's private sector rival reported an average production cost of $1,429 per tonne with its Jharsuguda smelter achieving even a lower production cost of $1,388 a tonne. Vedanta, despite the absence of captive lease and lack of captive bauxite sources, had succeeded in containing its making cost on the back of cost optimization measures and availability of power from group company owned power plant in the vicinity of its smelting complex at Jharsuguda.

Coal supplies from its captive block will help cut production cost of metal by Rs 500 per tonne.

is expanding its production through both, and routes. At its existing smelter at Angul which has a nameplate capacity of 0.46 million tonne per annum (mtpa), is adding 0.5 million tonne capacity per annum. The is also going for a new smelting unit at Kamakhyanagar in Dhenkanal district. The smelter with a proposed capacity of 0.6 mtpa is being pursued at an investment of Rs 12,000 crore.

To secure power supplies for the smelter, has entered into a joint venture agreement with Ltd for a coal-fired power project with a capacity of 2,400 Mw with an investment of Rs 14,000 crore. The location chosen for this power plant is Gajmara, some 45 km from Kamakhyanagar, the site of the proposed smelting unit. has agreed to buy 80 per cent of the power from the 2,400 Mw project.

At present, alumina, mainly exports by have been the key driver of its profitability. Last year, raked in export earnings of Rs 2,200 crore through exports. Since making in the country was dearer for due to the steep electricity cost, the company chose to export the surplus Every year, produces about two million tonne of of which nearly the half is exported. But, with opting for more value addition, its focus would be on conserving more and limiting exports. In 2017-18, has aimed to augment output by 12 per cent as prices have firmed up and prices of the metal have touched multi-year highs. prices for the cash buyer were ruling at $1,850 per tonne (as on March 14, 2017).

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Business Standard
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Nalco eyes profitability from aluminium operations by FY19 end

Firm says once coal mining from two key blocks starts, power cost will fall, profits will improve

National Company (Nalco) hopes to turn in profit from its business towards the end of 2018-19 after the commencement of coal mining from its captive Utkal D coal block.

"With the commencement of coal production from Utkal-D and Utkal-E blocks, the power cost will plunge which will make the business more profitable. We are hopeful that the production from Utkal-D block will start in two years", T K Chand, chairman cum managing director of told Business Standard.

Power cost accounts for 40 per cent of production. Despite being the lowest cost producer of in the world, steep power cost was constraining Nalco's ability to be cost effective in production. Nalco's production cost of the hot metal hovers around $1,450 per tonne. On the contrary, Nalco's private sector rival reported an average production cost of $1,429 per tonne with its Jharsuguda smelter achieving even a lower production cost of $1,388 a tonne. Vedanta, despite the absence of captive lease and lack of captive bauxite sources, had succeeded in containing its making cost on the back of cost optimization measures and availability of power from group company owned power plant in the vicinity of its smelting complex at Jharsuguda.

Coal supplies from its captive block will help cut production cost of metal by Rs 500 per tonne.

is expanding its production through both, and routes. At its existing smelter at Angul which has a nameplate capacity of 0.46 million tonne per annum (mtpa), is adding 0.5 million tonne capacity per annum. The is also going for a new smelting unit at Kamakhyanagar in Dhenkanal district. The smelter with a proposed capacity of 0.6 mtpa is being pursued at an investment of Rs 12,000 crore.

To secure power supplies for the smelter, has entered into a joint venture agreement with Ltd for a coal-fired power project with a capacity of 2,400 Mw with an investment of Rs 14,000 crore. The location chosen for this power plant is Gajmara, some 45 km from Kamakhyanagar, the site of the proposed smelting unit. has agreed to buy 80 per cent of the power from the 2,400 Mw project.

At present, alumina, mainly exports by have been the key driver of its profitability. Last year, raked in export earnings of Rs 2,200 crore through exports. Since making in the country was dearer for due to the steep electricity cost, the company chose to export the surplus Every year, produces about two million tonne of of which nearly the half is exported. But, with opting for more value addition, its focus would be on conserving more and limiting exports. In 2017-18, has aimed to augment output by 12 per cent as prices have firmed up and prices of the metal have touched multi-year highs. prices for the cash buyer were ruling at $1,850 per tonne (as on March 14, 2017).

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Business Standard
177 22