Aluminium Manufacturers Placed On A Sound Wicket

Apart from local production, the aluminium industry can also convert alumina into aluminium in low power cost smelters, located either in the Gulf or in Norway. The economics of conversion is very favourable to India as the table indicates. The cost of imported metal at present international rates along with customs duty is around $1,750 per tonne, leaving enough margin for toll convertors to book profits. The study predicts a shortage of 7.2 million tonnes in the global market by 2002 and expects international prices to show an uptrend.

In 1989, alumina prices shot up to $550 per tonne but crashed subsequently to $117 in 1994, while the average global cost of production was $140 per tonne.

 

Prices have now risen and are quoting at around $200 per tonne. Production of alumina in India costs around $100 per tonne, and provides enough cushion for producers to make reasonable profits.

The Indian alumina capacity may riseto three million tonnes.

Local aluminium demand: The study predicts aluminium demand to grow by five per cent from 4.85 lakh tonnes in 1995-96 to 5.27 lakh tonnes in 1996-97 and 5.41 lakh tonnes in 1997-98. National Aluminium Company (Nalco) is the biggest producer of aluminium and also the most competitive.

It produces captive power at 70 paise per Kwh and sells the surplus power at 82 paise per Kwh, a considerably low price, to the state grid. Nalco is the most efficient producer of aluminium metal. It uses only 15,514 units of power per tonne as against the global average of 15,800 tonnes. In 1996-97, power consumption was considerably higher at 15,600 units due to a breakdown at the Orissa State Electricity Board grid.

Nalco produced 178,072 tonnes of aluminium in 1995-96 and this capacity may increase to approximately 202,000 tonnes in 1996-97.

The study states that Nalco is one of the lowest priced producer of alumina and aluminium in the world.

With prices of both expected to go up in the coming years, Nalco should do well in the future.

Hindustan Aluminium: Hindustan Aluminium (Hindalco) is apparently the lowest cost producer of aluminium in the world at $980 per tonne. The power production cost at its captive power plant is estimated at 85 paise per unit. Hindalco expects to expand its alumina capacity from 3.5 lakh tpa to 4.5 lakh tpa by March 1997. This would make the company self-sufficient in alumina. It has expanded its metal capacity from 1.7 lakh tpa to 2.1 lakh tpa, which is again being expanded to 2.42 lakh tpa by March 1998.

Indian Aluminium: Indian Aluminium (Indal) makes up its drawback in production of primary metal by producing value-added products. Indal has three smelters. One is located at Alupuram in Kerala and has a capacity of 21,000 tonnes. The second smelter at Belgaum, with a capacity of 72,000 tonnes, produces between 6,000 tonnes to 7,000 tonnes and proposes to produce an additional 18,000 tonnes. The third smelter is at Hirakud. Indal has shifted 6,000 tonnes of capacity from Belgaum to Hirakud, where the smelter capacity has been raised from 24,000 tonnes to 30,000 tonnes.

Japanese ferro alloys import: Japan imported around 3.35 lakh tonnes of high ferro chrome during January/June 1996.

Exports were the highest from South Africa at 1.89 lakh tonnes and priced around $811 per tonne CIF. India was the second largest exporter with 52,000 tonnes, with the average price per tonne at around $960 CIF. The third largest exporter was China with 36,000 tonnes and the price realised per tonne CIF was $864. Japan imported 1.5 lakh tonnes of silico manganese in January/June 1996.