Aluminium producers likely to see pressure on profits says NALCO chief

Sep 24,2019

Tapan Kumar Chand, chairman, and managing director, National Aluminium Corporation (Nalco) stated that the falling global prices of alumina and aluminium are likely to put pressure on Indian producers of primary aluminium, which have achieved nearly full capacity utilization. At the company’s annual general meeting while addressing shareholders, he noted that domestic prices were linked to those on the London Metal Exchange.

In the last year’s September quarter, the London Metal Exchange’s average price of aluminium was USD 2,054 a tonne, about 14 percent more than the present one of USD 1,768 a tonne (in the June quarter, it was 21 percent less in India). The expected range in this financial year is USD 1,750-1,800 a tonne. Since the US-China trade war began, all-metal prices have been falling on fear of global economic slowdown.

Chand added, “ The threat of increasing aluminium import, which accounted for 58.9 percent of total consumption in 2018-19, persists. Support from the government in countering this will help domestic producers to safeguard their market share and profitability.”

He believes demand for aluminium will remain strong, driven by the usual high consuming sectors like automobiles, construction, and power. Nalco has decided to go ahead on its investment plans, despite pressure on its prices.

The central government-owned entity is adding a million tonnes per annum to its existing installed capacity of 2.275 million tonnes per annum, at a cost of Rs 5,540 crore in its alumina refinery. The project is likely to be completed by 2022-23.

Sourcing of bauxite for this expansion is to come from the Pottangi mines in Odisha’s Koraput district. It has 75 million tonnes of reserve and was reserved for Nalco by the central government, with mining scheduled from mid-2022. Its annual report stated Bauxite is also planned from the south block of its existing Panchpatmali mines in the same district, for which capital expenditure of Rs 483 crore has been projected.

Nalco is venturing into production of lithium-ion batteries to cater to electric vehicles. The company has been shortlisted by Indian Space Research Organization for transfer of the technology, an agreement having been signed this April. Chand said the process of technology transfer and training has started.

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