Ashapura inks pact with Chinese firm

To jointly develop alumina project in Kutch for $600 mn

Ashapura Minechem has signed a preliminary agreement with China's Qingtongxia Aluminium to jointly develop an alumina project in Kutch district at an estimated cost of $600 million.

Both the companies are expected to hold 50 per cent share each in the joint venture.

After its commendable success in manufacturing bleaching earth and calcined bauxite, Ashapura plans to expand its activities by setting up an alumina refinery with a capacity of one million tonne a year, which is to be set up in two different phases of 500,000 tonne each, according to reliable sources.

The underlying condition for the refinery's success is the strong demand for alumina.

Going by the global aluminum majors' consumption, the demand growth is expected to rise ahead of the economic growth, especially due to strong demand from the transportation sector, sources further said.

A large part of this demand will be from China, which will consume almost 20 per cent of the world's aluminium production by the end of 2006, sources added.

In China, the primary aluminium production has increased rapidly in the recent years but in future, the production will be constrained by un-availability of the competitively priced raw materials. It's alumina-capacity expansions have failed to keep pace with the country's growing smelter capacity.

China currently imports close to 4 million tons of alumina each year. Due to this robust demand, the prices of alumina have increased to US$ 460 per tonne from US$ 140 per tonne in October 2002, sources added.

According to sources, in the longer run, China is expected to experience huge alumina scarcity.

To take an advantage of this shortfall, the Ashapura group plans to use bauxite reserves in Kutch to produce alumina. For this, the company plans to set up a one million ton per annum alumina refinery in a joint venture with a reputed Chinese company, Qingtongxia Aluminium," an official said.