India can become a powerhouse in aluminium

The Indian aluminium market is growing at a rapid pace and it is one metallic industry where India can emerge as a powerhouse within the next

decade, said a spokesperson of Vedanta Aluminum Ltd, a leading producer of metallurgical grade alumina and other aluminium products in the country.

According to industry sources, India with total bauxite reserves of about 3 billion accounts for almost 7.5% of the world's 65 billion bauxite reserves and is ranked sixth among the countries with highest bauxite reserves. Indian bauxite reserves are expected to last over 350 year with proven and probable reserves are estimated at ~1200 Mt. The worldwide alumina production competence is around 58 million tonnes in which India has 2.7 million tones, being the fifth largest producer, after Australia, Guinea, Brazil and Jamaica.

Currently all the major Indian producers are trying to make good the opportunity by expanding furiously. China, which has doubled its aluminium capacity over past half decade to account for more than a fifth of the world's output, is a net exporter of the metal. The Indian aluminium market is growing at a rapid pace, yet per capita consumption is extremely low: With over 7% growth per annum, one of the highest in the world, the Indian aluminium market is booming. Even better, sectors that extensively use aluminium are themselves booming, ensuring that this sector stays firmly on the growth path for times to come. Total aluminium consumption in the country is around 1,100 KT at present, which has grown significantly from 2002 level of 600 KT.

Though India's per capita consumption of aluminium stands too low (under 1 kg) comparing to the per capita consumptions of other countries like the US & Europe (25 to 30 kgs), Japan (15 kgs), Taiwan (10 kgs) and China (3 kgs), the demand is growing. In India, the industries that require aluminium mostly include power (44%), consumer durables, transportation (10-12%), construction (17%) and packaging. With one of the world's lowest per capita consumption, the country’s aluminium demand is set to explode,” said the Vedanta spokesperson.

India is the eighth leading producer of primary aluminium in the world, with total production amounting to over 1,200 KT. The country has witnessed significant growth in aluminium production during the past five years, thanks to companies like Vedanta which have contributed considerably to achieve this. However, the aluminium capacity in the country is only 5% of the world total, despite having the world's 7.5% bauxite reserves, indicating the scope and need for new capacities in the country.

Domestic aluminium production in India sufficiently meets the demand. Production of 1,200 KT is well consumed domestically with demand accounting for over 1,100 KT. With production surpassing the consumption marginally, India, at present, is a net exporter of aluminium.

• The country is set to take a big leap in aluminium export with companies like Vedanta betting big in aluminium production with India being on fourth position among the world's largest aluminium producers, from the present eighth spot, displacing Norway, Brazil, Australia and Canada in the process. With Vedanta adding huge aluminium production capacities, the country is expected to become one of the largest exporters of aluminium in the world with exportable aluminium capacity of 730 KT by 2012,” said the spokesperson.

India is already amongst the lowest cost producers in the world with Hindalco and Nalco already known as some of the lowest cost producers in the world. India's low costs can be largely attributed to the easy availability of bauxite.

At present, cost of aluminium production in India is about $1500 per tonne compared to the world average of $1,600 per tonne. “Implementation of such large-sized aluminium plant by Vedanta would bring economies of scale in the operation and will help further reduce cost of production. This will help India take the cost advantage over other countries and become a powerhouse in the aluminium market,” said the spokesperson.

Meanwhile, implementation of the entire $13.5 billion aluminium capacities expansion projects would propel Vedanta from fourteenth largest to fourth largest aluminium producer in world. The total aluminium production capacity of Vedanta would increase 5 times from the present level of 500 KT to 2,575 KT, said the spokesperson.

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