We're importing coal now and I'm worried about rising costs: Hindalco MD

In a Q&A, Satish Pai calls for getting more mines under auction to meet the demand-supply gap

With Hindalco Industries having to import coal this time, the company is concerned about the cost of the fuel, going forward. In an interview with Aditi Divekar and Dev Chatterjee, the company's mananging director Satish Pai talks about plans to address this, and also dwells on rising aluminium imports and the status of Aleris deal. Edited excerpts:

Hindalco’s power and fuel costs have increased significantly. How big is coal cost a concern for you, given that you have four captive mines?

I am worried. We have started to import some quantities. Of the total 16-million-tonne requirement, we imported about one million tonnes in the September quarter. To import coal at this point, when the rupee is at the level it is, and when we have our own mines and the linkages, it is definitely a concern. Coal costs went up 11 per cent this quarter since domestic prices in the spot market spiked.

How do you think the coal issue can be resolved?

Coal is the major source of power. Get more mines into auction. Government should have single-window clearances. Coal India production is seen at 600 million tonnes, when the demand is 750-800 million tonne, so the balance will have to be imported. If no new mines are opened, it will be difficult to keep pace with the growing demand. Hopefully, Coal India production will pick up now, since monsoons are over.

How do you see business over the next two quarters?

Aluminium on LME (London Metal Exchange) is trading at $2,000 per tonne. This should be the bottom price. There is certainly an upside to the LME as the supply-demand equation is too tight. The world is facing a 1.6-million-tonne deficit for aluminium and inventories are at all-time lows. On the domestic front, Indian demand in April-September is up 13 per cent on year-on-year basis, but our market share is getting eaten up by imports. Chinese imports have shot up over 50 per cent, while US scrap imports have gone up 145 per cent.

What is the status of Aleris acquisition deal. Have you started hiring at Aleris?

The US approval for Aleris should come as early by February but more crucial is the Chinese approval, work for which is currently on. Right now, we are not touching Aleris, it is working independently and our integration teams are placed there. Only after we take over, we will invest in the entity. Aleris has no money, it is run by private equity.