While the overall aluminium output from its smelters at Jharsuguda and Balco's smelting unit at Korba is expected to move up 60 per cent, production at Lanjigarh refinery would be ramped up from one million tonne (mt) to 1.5 mt, an increase of 50 per cent. The company's aluminium production this fiscal is pegged at 1.5 mt, up from 0.93 mt in 2015-16.
"The combined aluminium production in this fiscal from our smelters at Jharsuguda and Korba would be 1.5 mt. While Jharsuguda would contribute 0.9-1 mt, the rest of the production would come from Korba. We have already initiated capacity ramp up of our Balco smelter at Korba and the second aluminium smelter at Jharsuguda", Abhijit Pati, chief executive officer (aluminium), Vedanta Ltd told reporters here on the sidelines of an Assocham conference on 'Mining in Odisha'.
He said, ramping up of aluminium production looked sustainable despite Vedanta's dependence on imported alumina.
"For producing 1.5 mt of aluminium, we need three mt of alumina. Of this 1.5 mt would come from our Lanjigarh refinery as we intend to raise its capacity. We would meet the balance requirement through imports", he added.
Vedanta has approvals to operate the Lanjigarh refinery at four mt capacity per annum. But, lack of local bauxite has hindered its operations.
To feed the refinery, Vedanta was sourcing 60-70 per cent of bauxite from domestic sources and importing the remaining 30 per cent.
Asked on global LME prices, Pati said he is not very upbeat.
"The market will continue to be weak. There is no production cut especially in countries like China which has only stopped its inefficient smelters. The LME (London Metal Exchange) prices for aluminium are expected to be in the range of $1500-1550 a tonne for the next 14-16 months", said he.
He said, the domestic demand for aluminium, however, remained robust and clocked a double digit growth in last fiscal. India's per capita aluminium consumption is around two kg compared to 25 kg in China and this presents a huge scope for growth.
"Growth in aluminium demand would be driven by sectors like infrastructure, transmission, extrusions and also the government's efforts to develop Smart Cities", he claimed.
But, the flood of cheaper imports, especially from the Middle East were a concern for the domestic producers, he admitted.
"Power cost accounts for 45-48 per cent of the cost of production of aluminium. But the smelters in the Middle East were in an advantage since they were powered by gas. Aluminium producers in the country have already invested Rs 1.25 lakh crore but our capacity utilisation is only 60 per cent. From time to time, we have been giving representations to the Government of India through the Aluminium Association of India, on the need for safeguard duty", he added.