Hindalco to invest Rs 700 crore on de-bottlenecking Utkal alumina refinery

Aditya Birla Group owned Hindalco Industries plans to invest Rs 500-700 crore on de-bottlenecking its Utkal alumina refinery project in Odisha's Rayagada district.

"Yes, we are already working on, let say the engineering designs for that de-bottlenecking. I will just leave at that because, I think in 2017-18 we would have got the complete engineering and the de-bottlenecking sorted out. So, really it is a question of whether you put in a completely new train or just de-bottlenecking and to be clear, our preference right now is to de-bottleneck and that is why we have applied for clearances to go up to about 2.25 (million tonne) as a first range", Satish Pai, managing director, Hindalco Industries said in an earnings conference call.

The de-bottlenecking is expected to be done in 18 months. The Utkal refinery is fed by the company's captive Baphlimali bauxite mines with enough reserves to cater to the refinery's requirement for 25 years after its ramp-up. The mine contains very low amount of silica and has been largely cocooned from the recent spike in caustic soda prices.

Production at Utkal Alumina International, a 100 per cent subsidiary of Hindalco Industries, increased eight per cent year-on-year to reach 393,000 tonne in the December quarter. The refinery is running at its full design capacity and has cemented its position as one of the lowest cost refineries of the world. During the December quarter, Utkal delivered an EBITDA (earnings before interest, taxes, depreciation and amortisation) of Rs 140 crore.

"Utkal today is a world class asset and our captive alumina bagged by captive bauxite is proving to be a great strength. We believe that operational improvements ensure that better performance will be sustained in the coming quarters", Pai said during the recent conference call.

Hindalco has applied for clearances to scale up the refinery capacity from 1.5 million tonne per annum (mtpa) now to 2.25 mtpa.